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This weekend, the world’s largest economies will put pressure on the most resilient nations to refuse to sign a global tax reform deal that would impose a minimal burden on multinational corporations.
Economy ministers and G20 central bankers met in Venice on Friday to discuss the proposal, which was agreed by the G7 nations last month and supported by 130 countries in talks held by the OECD in Paris earlier this month.
They are expected to formally respond to the deal, which will force the world’s largest multinationals to pay a global minimum corporate tax rate, in a statement to be released Saturday after the meeting.
The OECD proposal also seeks to establish a system according to which countries would tax some profits recorded by large companies depending on where they were generated.
A draft of the statement, released on Friday and verified in the Financial Times by an official of a G20 nation, urges all countries that maintain the agreement to be granted when the leaders of G20 member countries meet in Italy in the October.
The precise wording of the statement has not yet been finalized, officials from several G20 countries said, but an official from a large country said that the approval of the agreement by the G20 would mean that “there was no going back. “.
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 register because it did not have a government in place when the agreement was made, but it has now done so and has so far 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 agreements called “carve-out” that would allow some countries to use the options to exclude the agreement 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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