First modification: 07/11/2021 – 01:52
The finance ministers of the G20 countries approved this Saturday a taxation mechanism for multinationals. The project, which had already been agreed upon by the OECD, seeks a global minimum tax of at least 15% on the profits of companies with a global presence. Efforts are now expected to focus on convincing 9 of the 139 reluctant OECD countries to make a final decision at a summit scheduled for next October.
Backing the G20 to impose a global tax on the world’s big companies. Finance ministers and leaders of the bloc’s central banks announced on July 10 that they back the historic international tax agreement, endorsed by the Organization for Economic Cooperation and Development (OECD), on July 1.
“We celebrate the agreement reached by the # G20 to achieve an international tax architecture that establishes a minimum corporate tax and that multinationals pay taxes where they obtain their benefits. A more just, global and efficient system adapted to the 21st century,” emphasized the president of the Spanish Government, Pedro Sánchez, after concluding the first of the two summit days of the bloc, in Venice.
We celebrate the agreement reached by the # G20 to achieve an international tax architecture that establishes a minimum corporate tax and that multinationals pay taxes where they obtain their profits. A fairer, more global and efficient system adapted to the 21st century. https://t.co/fBkVQGYFMI
– Pedro Sánchez (@sanchezcastejon) July 10, 2021
The group of 20 is made up of industrialized countries and emerging economies: in addition to the nations of the European Union, the United States, Australia, Argentina, the United Kingdom, Brazil, China, Indonesia, Japan, Mexico, Turkey, Russia, South Africa and South Korea.
The plan focuses on two main guidelines: impose a global tax of at least 15% on multinationals, in order to prevent them from diverting their funds to tax havens with low tax rates; as well as assigning to certain jurisdictions a percentage of the profits of these companies, especially digital organizations, so that they are taxed where they operate, regardless of whether they have a physical headquarters or not.
“The French Government has worked hard to achieve this agreement, we have worked for four years, and now we have the opportunity to achieve it, not at the level of the G7, but of the G20”, declared the Minister of Finance of France, Bruno Le Maire, at the end of the meeting.
For her part, the Secretary of the Treasury of the United States, Janet Yellen, assured that once the procedure is started, the “counterproductive international tax competition” will end. A race in which many countries for years have lowered their rates to attract multinationals.
Yellen added that it has been a situation that “no one won,” because what it has done is “deprive us of the necessary resources to invest in our towns, our workforces, our infrastructure,” he said.
What are the next steps for the entry into force of the global tax?
One of the points that is expected to continue to be debated until the next OECD summit, in Rome, in October, is the percentage that will be defined for the minimum global tax.
Nations like France, Argentina and the United States are pushing for it to be even higher than 15%.
“France accepted that the minimum corporate tax was at least 15% in the final G7 declaration. We want that minimum corporate tax rate to be higher than 15%, that will be the position that I will defend here today,” he said. to meet this Saturday the French holder of the Finance portfolio.
The next steps also include convincing countries that were reluctant to the plan, since the OECD agreement was approved in July by 130 of the 139 countries that comprise it.
Nine remain reluctant. Among them, some members of the European Union such as Ireland, Hungary and Estonia, which for years have attracted private investment due to their low tax rates for companies, unlike other nations.
However, the German Finance Minister was confident that they would join the plan, noting that the G20 represents “90% of global GDP (gross domestic product).”
The final decision is expected to be approved at the OECD summit that will take place between October 30 and 31, in Rome.
Implementation of the plan is expected in 2023, but would depend on actions at the national level. The countries would enact the new minimum tax requirements in their laws. Other parties may require a formal treaty.
With AP and EFE