Friday, March 29, 2024

G20 supports landmark global tax reform | Coronavirus pandemic news

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The finance ministers of the G20 large economies have approved a landmark move to prevent multinational companies from shifting their profits to a low-tax haven.

Ministers at a meeting in Venice, Italy on Saturday also acknowledged the need to ensure fair access to vaccines in poorer countries.

But the draft communiqué, which will be rubber stamped at the meeting, does not contain specific new suggestions on how to do this.

The taxation agreement will be the biggest new policy move that appears in their negotiations.

It ended eight years of controversy on this issue, with the purpose of allowing leaders of various countries to give it the final blessings at the G20 summit in Rome in October.

The agreement will establish a global minimum corporate tax of at least 15% to prevent multinational companies from looking for the lowest tax rate.

It will also change the way high-margin multinational companies such as Amazon and Google levy taxes, depending in part on where they sell their products and services, rather than where their headquarters are located.

German Finance Minister Olaf Schultz confirmed to reporters that all G20 economies have joined the agreement, while US Treasury Secretary Janet Yellen said that a small number of small countries that still oppose the agreement will be encouraged, such as low-tax Ireland and Hungary. To sign the agreement. Until October.

“We will work hard to do this, but I should emphasize that not every country is involved,” she said.

“The agreement contains an enforcement mechanism that can be used to ensure that persistent countries cannot use tax havens to disrupt the operation of the global agreement.”

G20 members account for more than 80% of the world’s GDP, 75% of global trade and 60% of the earth’s population, including the United States, Japan, the United Kingdom, France, Germany, and India.

In addition to the EU’s Ireland, Estonia and Hungary, other countries that have not yet signed include Kenya, Nigeria, Sri Lanka, Barbados, and Saint Vincent and the Grenadines.

Among other problems, the US Congress’s plan for President Joe Biden’s plan to increase taxes on businesses and wealthy Americans may cause problems, and the European Union’s separate plan to impose digital taxes on technology companies may also cause problems.

U.S. Treasury officials said the EU’s plan is inconsistent with the broader global agreement, even if the taxation is mainly aimed at European companies.

Italian Minister of Economy and Finance Daniel Franco leaves the press conference of the G20 High-Level Independent Group (HLIP) [Andreas Solaro/AFP]

Dual-track recovery

In addition to the tax agreement, the G20 will also address people’s concerns that the rapid spread of the Delta coronavirus variant, coupled with unequal access to vaccines, poses a risk to the global economic recovery.

The draft communiqué quoted the improvement in the global outlook so far: “However, the recovery is characterized by huge differences between and within countries, and still faces downside risks, especially the spread of new variants of the COVID-19 virus and different vaccinations. speed.”

Reuters statistics on new COVID-19 infections show that they are on the rise in 69 countries/regions. Since late June, the daily infection rate has been on the rise and now reaches 478,000.

French Finance Minister Bruno Le Maire told reporters: “We must all improve our vaccination performance around the world.”

“Our economic forecasts for the G20 economies are very good. The only obstacle to a rapid and robust economic rebound is a new wave of risks.”

Kristalina Georgieva, managing director of the International Monetary Fund, said that the world is facing a “deteriorating dual-track recovery,” partly due to differences in vaccine supply.

“This is a critical moment that requires urgent action by the G20 and global decision makers,” she said in an appeal issued on the eve of the meeting.

Although the communiqué emphasized support for the “global equitable sharing” of vaccines, it did not propose specific new measures. It only recognized the $50 billion new vaccine financing proposal made by the International Monetary Fund, the World Bank, the World Health Organization and the World Trade Organization.

The IMF is also pushing the G20 countries to decide on a clear path to allow rich countries to provide poorer countries with newly issued IMF reserves worth about US$100 billion.

Jeffrey Okamoto, the first vice-president of the International Monetary Fund, told Reuters that his goal is to come up with a viable option to provide the newly issued Special Drawing Rights before the completion of the new US$650 billion appropriation at the end of August. Countries in need.




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