The finance ministers of the G20’s major economies have taken an important step to prevent multinationals from moving profits to low-tax havens.
Ministers at Saturday’s meeting in the Italian city of Venice also acknowledged the need to ensure fair access to vaccines in the poorest countries.
But a draft statement that was stamped at the meeting did not contain new specific proposals on how to do so.
The tax deal was the main new political initiative emerging from their talks.
Eight years of disputes over the issue are coming to an end and the goal is for national leaders to give him the final blessing at an October G20 summit in Rome.
The pact would set a global corporate tax of at least 15% to deter multinationals from buying the lowest tax rate.
It would also change the way highly profitable multinationals like Amazon and Google are taxed, based in part on where they sell products and services, rather than the location of their headquarters.
German Finance Minister Olaf Scholz confirmed to reporters that all G20 economies were involved in the pact, while US Treasury Secretary Janet Yellen said a good handful of smaller countries were still they opposed it, as did Ireland and Hungary with low taxes. until October.
“We will try to do this, but I should stress that it is not essential that all countries are on board,” he said.
“This agreement contains a kind of enforcement mechanism that can be used to ensure that countries in a position of detention are not able to undermine: use tax havens that undermine the functioning of this global agreement.”
G20 members make up more than 80 percent of the world’s gross domestic product, 75 percent of world trade and 60 percent of the world’s population, including the United States, Japan, Britain, France, Germany and the United States. India.
In addition to the remnants of the European Union, Ireland, Estonia and Hungary, other countries that have not signed it are Kenya, Nigeria, Sri Lanka, Barbados and Saint Vincent and the Grenadines.
Among other remaining points, a fight in the U.S. Congress over President Joe Biden’s planned increases in businesses and wealthy Americans could cause problems, as could a separate EU plan for digital taxation on businesses. technological.
U.S. Treasury officials say the EU plan is inconsistent with the broader global agreement, even if the rate is largely aimed at European companies.
Two-way recovery
Beyond the tax deal, the G20 will address concerns that the rapidly expanding Delta coronavirus variant, combined with unequal access to vaccines, poses risks to the global economic recovery.
Citing improvements in the global outlook so far, the draft statement said: “However, the recovery is characterized by large divergences between and within countries and continues to be exposed to negative risks, in particular the spread of new variants of the COVID virus. -19 and different vaccination rates “.
A Reuters news agency account of new COVID-19 infections shows they are rising in 69 countries, with a daily rate hitting since the end of June reaching 478,000.
“We all need to improve our vaccination performance around the world,” French Finance Minister Bruno Le Maire told reporters.
“We have very good economic forecasts for the G20 economies and the only obstacle on the road to a rapid and solid economic recovery is the risk of having a new wave.”
IMF Managing Director Kristalina Georgieva said the world was facing “a worsening of the two-way recovery,” motivated in part by differences in vaccine availability.
“It is a critical moment that calls for urgent action by the G20 and political leaders around the world,” he said in an appeal made during the preparation of the meeting.
The statement, while stressing support for a “fair global distribution” of vaccines, did not propose concrete measures, only acknowledged a $ 50 billion recommendation in financing new vaccines by the IMF, the World Bank, the ‘World Health Organization and World Trade Organization.
The IMF is also pushing G20 countries to decide on a clear path to allow rich countries to contribute some $ 100 billion in newly issued IMF reserves to the poorest countries.
IMF First Deputy Director General Geoffrey Okamoto told Reuters that his goal was to be able to present a viable option to channel newly issued special collection rights to countries in need when a new $ 650 billion allocation is completed. dollars in late August.
