Wednesday, January 19

The G20 backs the crackdown on the use of tax havens by multinationals | G20

The finance chiefs of the G20 economies have backed a historic move to prevent multinationals from transferring profits to tax havens and will also warn that Covid variants threaten global economic recovery.

In talks on Saturday, they also recognized the need to ensure fair access to vaccines in the poorest countries. But a draft communiqué to be sealed at the Venice meeting did not contain specific proposals on how to achieve this.

The tax deal was expected to be the biggest new policy initiative to emerge from their talks. Covers eight years of disputes on the subject. The goal is for national leaders to give him a final blessing at the October G20 summit in Rome.

The pact would establish a global minimum corporate tax of at least 15% to discourage multinationals from seeking 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 that all G20 economies agreed to the pact, while US Treasury Secretary Janet Yellen said a handful of smaller countries still oppose it , like Ireland and Hungary with low taxes, they would. Dare to register before October.

“We will try to do that, but I must emphasize 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 make sure that countries that are holdouts cannot undermine … the operation of this global agreement.”

G20 members represent more than 80% of the world’s gross domestic product, 75% of world trade, and 60% of the planet’s population. They include the United States, Japan, Great Britain, France, Germany, and India.

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

Among other sticking points, a fight in the US Congress over Joe Biden’s planned tax increases for corporations and wealthy Americans could cause problems, as could a separate EU plan for a digital tax on technology companies.

US Treasury officials say the EU plan is not consistent with the broader global agreement, even if the levy is primarily aimed at European companies.

Beyond the tax deal, the G20 will address concerns that the rise in the fast-spreading variant of the Delta coronavirus, combined with uneven access to vaccines, poses risks to the global economic recovery.

Citing improvements in the global outlook so far, the draft adds: “However, the recovery is characterized by large divergences between and within countries and remains exposed to downside risks, in particular the spread of new variants of the Covid virus. 19 and different vaccination rates “.

TO Reuters Count of New Covid-19 Infections It shows them increasing in 69 countries, with the daily rate pointing up from the end of June and now reaching 478,000.

“We all have to improve our vaccination performance around the world,” said French Finance Minister Bruno Le Maire. “We have very good economic outlooks for the G20 economies and the only obstacle on the way to a fast and robust economic recovery is the risk of having a new wave.”

IMF Managing Director Kristalina Georgieva said the world is facing “an increasingly worse two-way recovery” driven in part by differences in vaccine availability.

“It is a critical moment that requires urgent action by the G20 and policy makers around the world,” he said before the meeting.

The communiqué, while emphasizing support for the “equitable global exchange” of vaccines, did not propose new concrete measures, simply recognized a recommendation of 50,000 million dollars (36,000 million pounds sterling) in the financing of new vaccines by the IMF. the World Bank, the World Health Organization and World Trade. Organization.

The IMF is also pressing the G20 countries to decide on a clear path to allow rich countries to contribute $ 100 billion of recently issued IMF reserves to poorer countries.

The IMF’s first deputy managing director, Geoffrey Okamoto, told Reuters his goal was to be able to present a viable option to channel the newly issued special drawing rights to countries in need by the time a new $ 650 billion allocation is completed by the end of August.

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