G20 signs tax cuts agreement, warns of virus variants Reuters

Author: David Lauder and Leigh Thomas

Venice, Italy (Reuters)-The finance ministers of the G20 large economies approved a landmark measure to prevent multinational companies from shifting their profits to a low-tax haven during Saturday’s talks. They will also warn against the coronavirus. Variations threaten the recovery of the global economy.

They also acknowledged the need to ensure fair access to vaccines in poorer countries. But the draft communiqué to be rubber-stamped at the Venice meeting in Italy did not contain specific new recommendations 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 over tax issues, with the purpose of allowing leaders of various countries to give it the final blessing at the G20 summit in Rome in October.

The agreement will establish a minimum global corporate tax of at least 15% to prevent multinational companies from looking for the lowest tax rate. It will also change the taxation of high-profit multinational companies such as Amazon (NASDAQ:) and Google (NASDAQ:), based in part on where they sell products and services, rather than their headquarters. location.

German Finance Minister Olaf Schultz confirmed to reporters that all G20 economies have joined the agreement, and US Treasury Secretary Janet Yellen said that it will encourage a small number of small countries that still oppose the agreement, such as low-tax Ireland and Hungary. ,sign protocol. 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 that the EU’s plan is inconsistent with the broader global agreement, even if the tax is mainly targeted at European companies.

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.

Citing the improvement in the global outlook so far, the draft added: “However, the recovery is characterized by huge differences between and within countries, and it still faces downside risks, especially the spread of new variants of the COVID-19 virus and different rates of vaccination. vaccine.”

Reuters statistics on new COVID-19 infections show that they are on the rise in 69 countries/regions. The number of daily infections has been on the rise since late June, and has now reached 478,000. https://graphics.reuters.com/world-coronavirus-tracker-and-maps

French Finance Minister Bruno Le Marie told reporters: “We must all improve our vaccination performance around the world.” “Our economic forecast for the G20 economies is very good, and the only obstacle to achieving a rapid and stable economic rebound is the new A 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 US$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.

Geoffrey Okamoto, the first vice president of the IMF, told Reuters that his goal is to come up with a viable option to provide the newly issued special drawing rights to countries in need before completing the new US$650 billion allocation at the end of August.

(Additional reporting by Gavin Jones, Christian Kraemer, Francesco Guarascio; writing by Mark John; editing by Gareth Jones)