G-20 approves global minimum corporate tax at Rome summit
Leaders of the world’s largest economies on Saturday approved a global minimum corporate tax, a pillar of new international tax rules aimed at blunting the edge of tax havens amid skyrocketing profits of some multinational companies.
The decision of the Group of 20 summit in Rome was hailed by US Treasury Secretary Janet L. Yellen as benefiting American businesses and workers.
The G-20 finance ministers had already agreed in July on a minimum tax of 15%. He was awaiting official approval at Saturday’s Rome summit of world economic powers.
Yellen predicted in a statement that the agreement on new international tax rules, with a global minimum tax, “will end the race to the damaging race to the bottom in corporate taxation.”
The deal did not respond to US President Joe Biden’s initial call for a 21% minimum tax. Still, Biden tweeted his satisfaction.
“Here at the G20, leaders representing 80% of global GDP – allies and competitors – have clearly expressed their support for a strong global minimum tax,” the president said in the tweet. “It’s more than just a tax deal – it’s diplomacy that is reshaping our global economy and serving our people. “
The deal aims to discourage multinationals from hiding their profits in countries where they pay little or no tax. Nowadays, multinationals can make big profits from things like brands and intellectual property. These companies can then allocate the profits to a subsidiary in a tax haven.
Informing reporters midway through the summit, German Chancellor Angela Merkel said: “There are good things to report here. The world community has agreed on minimum corporate taxation. This is a clear signal of justice in the age of digitization.
Mathias Cormann, secretary general of the Organization for Economic Co-operation and Development in Paris, said the agreement reached in Rome “will make our international tax arrangements fairer and work better in a digitalized and globalized economy”.
The minimum rate “completely eliminates the incentive for companies around the world to restructure their businesses to avoid tax,” Cormann said.
On other issues critical to equity across the world – including access to COVID-19 vaccines – the summit on the first of its two days heard calls to increase the percentage of people in poor countries being vaccinated .
Italian Prime Minister Mario Draghi has launched an urgent appeal to speed up the delivery of vaccines to poor countries.
Draghi, the summit’s host, said on Saturday that only 3% of people in the world’s poorest countries are vaccinated, while 70% in rich countries have had at least one injection.
“These differences are morally unacceptable and undermine the global recovery,” said Draghi, economist and former head of the European Central Bank.
French President Emmanuel Macron pledged to use the summit to pressure other European Union leaders to be more generous in donating vaccines to low-income countries.
But civil society advocates who had discussions with G-20 officials said the suspension of vaccine patents was crucial to increasing access in poor countries.
Canada said it was sharing both vaccines and donating money to expand production in South Africa, which is a G-20 country. Chrystia Freeland, Deputy Prime Minister, said Canada is increasing its commitment to international vaccine sharing through the COVAX program by donating 200 million doses.
The summit is also facing what amounts to what has unfolded as a two-track global recovery in which rich countries are rebounding faster.
Rich countries have used vaccines and stimulus spending to jumpstart economic activity, leaving the risk that developing countries that account for a large chunk of global growth will lag behind due to low immunization rates and hardship. funding.
Macron told reporters he expects the G-20 to confirm an additional $ 100 billion to support African economies.
On the urgent problem of climate change, Italy hopes the G-20 will secure crucial commitments from countries responsible for around 80% of global carbon emissions – ahead of the UN climate conference which begins on Sunday in Glasgow, Scotland, as does the summit in Rome. calm down.
Most of the G-20 leaders will travel to Glasgow.
Russian President Vladimir Putin and Chinese leader Xi Jinping, whose efforts to reduce emissions are central to tackling climate change, were participating in the Rome summit from a distance.
But halfway through the summit, it was the corporate tax rate rule that dominated that stood out as an accomplishment.
White House officials say the new tax rate would create at least $ 60 billion in new income per year in the United States – a flow of money that could help partially pay for a package of social services and d infrastructure worth nearly $ 3 trillion that Biden is looking for. Adoption by the United States is essential as there are many multinational corporations headquartered there.
But Civil 20, which represents some 560 organizations from more than 100 countries in a network making recommendations to the G-20, was less enthusiastic. The 15% rate is “a little more than those (rates) that we would consider tax havens,” Riccardo Moro, head of Civil 20, told reporters after the summit.