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The world’s largest economies have put their weight behind a comprehensive tax reform agreement that would impose a minimal burden on multinational companies, which would increase pressure on a small number of remaining countries to sign the agreement.
Economy ministers and G20 central bankers meeting in Venice on Saturday issued a joint statement supporting the tax deal agreed by the G7 nations last month and with the support of 130 countries in talks held by the OECD in Paris earlier this month.
The statement said the agreement was “a historic agreement on a more stable and fairer international tax architecture” and the G20 called on “all OECD members … who have not yet joined the agreement.” agreement to do so ”.
He called on all countries in the negotiations to “quickly address the remaining issues and finalize the design elements” for the next G20 meeting in October.
U.S. Treasury Secretary Janet Yellen said the G20 would try to get smaller countries, including Ireland and Hungary, to accept the deal, but that was not essential to moving forward.
“It’s not essential that all countries are on board,” he said.
Bruno Le Maire, the French finance minister, called the tax deal “a tax revolution once a century”.
“International tax reform has been agreed and there is no going back,” he said.
The next steps at the October G20 meeting will be to set a globally agreed minimum tax rate and find out how tax benefit quotas will be allocated between countries.
Eight countries, including Ireland, Barbados, Hungary and Estonia, have suspended the 15% minimum rate agreement, which is backed by the US, China, India and most EU countries. Other highlights are Sri Lanka, Nigeria, Kenya and Saint Vincent and the Grenadines.
Some low-tax jurisdictions and investment centers, such as the Bahamas and Switzerland, have already signed up.
Peru did not originally sign up because it did not have a government in place when the deal was made, but it has now done so and signed 131 signatories.
While the G20’s political endorsement will provide a boost to efforts to reach a final agreement, which is expected to be implemented in 2023, important technical issues remain and are unlikely to be resolved this weekend.
These include several so-called cut-off agreements that would allow some countries to use the agreement’s disagreement options to encourage investment.
Another obstacle is expected to be Republican opposition in the United States Congress; President Joe Biden is likely to need Congressional approval for at least some elements of the proposal.
Kevin Brady, the top Republican on the House of Forms and Means committee, has described the deal as “a dangerous economic surrender that sends jobs to the U.S. overseas.”
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