Finance ministers from the world’s largest economies have backed a global agreement that reviews the way countries tax large corporations and sets it up for approval by heads of state at a summit later this month.
The statement of support from the Group of 20 central bank ministers and governors, following a meeting in Washington on Wednesday, came five days after 136 governments reached an agreement that resolved key differences over the level of a global minimum rate. and the end of the new digital technology. taxes that the United States has deemed discriminatory.
“This agreement will establish a more stable and fairer international tax system,” the G-20 said in its statement.
The deal means that national digital taxes, introduced by some governments, including those of Italy and France, will be removed by 2024, according to Italian Finance Minister Daniele Franco, whose country leads the G-20 this year.
The G-20 also said in its statement on Wednesday that the global economic recovery “remains highly divergent between and within countries and is exposed to downside risks, in particular the possible spread of new variants of Covid-19 and uneven vaccination rates “. The nations reaffirmed that they will use “all available tools” to address the adverse effects of the pandemic.
Finance ministers and central bankers also signaled heightened inflation concerns, saying that monetary authorities “are closely monitoring current price dynamics.”
“They will act as necessary to fulfill their mandates, including price stability, while analyzing inflationary pressures when they are transitory and remaining committed to clearly communicating political positions,” the G-20 said.
German Finance Minister Olaf Scholz, who is likely to succeed Angela Merkel as chancellor, said high inflation is likely to decline and price increases are due to disruptions from the pandemic, economic recovery and higher costs of the economy. oil and gas.
“All the experts tell us that in the next year we will normalize price inflation again,” Scholz said Wednesday in a Bloomberg Television interview in Washington.
The tax deal, which has been in the works for years, aims to end what US Treasury Secretary Janet Yellen calls a global “race to the bottom” between countries that attract companies with ever-increasing tax rates. lower. It also seeks to more equitably distribute the tax revenues of big tech companies like Facebook Inc. and Alphabet Inc.’s Google, after some nations imposed their own digital taxes on those companies.
The G-20-backed deal includes a minimum rate of 15% for corporations and the main parameters of how much profits from the 100 or more large multinationals would be taxed in more countries: 25% of profits over a 10% margin.
G-20 leaders are expected to approve the plans at a summit in Rome in late October. The Organization for Economic Cooperation and Development, which has chaired the talks, is aiming for a multilateral convention next year and its implementation in 2023. Several hurdles remain, however, including ratification by the US Congress.
© 2021 Bloomberg