The world’s largest economies have shed their weight behind a global tax reform agreement that would impose a minimum levy on multinational corporations, increasing pressure on a small number of countries rushing to sign the agreement.
On Saturday, G20 economy ministers and central bankers meeting in Venice issued a joint communiqué approving the tax deal, which was agreed by G7 nations last month and supported by 130 countries in discussions hosted by the OECD in Paris earlier this month.
The communiqué said the agreement was “a historic agreement on a more stable and fairer international fiscal architecture” and the G20 called on “all OECD members … who are not yet adherents to the agreement. to do “.
He called on all negotiating countries to “quickly address the remaining issues and finalize the elements of conception” by the next G20 meeting in October.
Janet Yellen, the US secretary of the treasury, said the G20 would seek to bring small countries in fury, including Ireland and Hungary, to accept the deal but this was not essential to move forward. .
“It doesn’t matter that all the countries are on board,” he said.
Bruno Le Maire, French finance minister, called the tax deal “once in a century a tax revolution”.
“International tax reform has been agreed and there is no going back,” he said.
The next steps for the October G20 meeting will be to set a globally agreed minimum tax rate and to understand how the share of tax benefits will be shared among countries.
Eight countries, including Ireland, Barbados, Hungary and Estonia, have agreed to the minimum 15 per cent levy, which is supported by the United States, China, India and most of them. of EU countries. Other attractions include Sri Lanka, Nigeria, Kenya and St Vincent and the Grenadines.
Some low-rate jurisdictions and investment centers, such as the Bahamas and Switzerland, are already established.
Peru did not originally sign because it did not have a government in place when the agreement was made, but it has now done so, leaving 131 signatories.
While the G20’s political approval will give a boost to efforts to reach a final agreement, which is expected to be put in place by 2023, important technical issues remain and are unlikely to be resolved this weekend.
These include various so-called carve-out agreements that allow certain countries to use the waivers of the agreement to encourage investment.
Another obstacle is predicted to be Republican opposition in the United States Congress; President Joe Biden needs to have Congressional approval for at least some elements of the proposal.
Kevin Brady, the first Republican on the House and Representatives’ committee on the ways and means of the House of Representatives, described the deal as “a dangerous economic return that sends American jobs overseas.”