G20 bargains on $150bn minimum corporate tax deal

Photo: AP Policemen patrol St.Mark's Square during a G20 meeting of Economy and Finance ministers and Central bank governors in Venice, Italy.

Taxes will be in the focus of the first face to face meeting of finance ministers and central bankers of the G20 countries since the start of pandemic. The meeting takes place in Venice, Italy, Reuters elaborated. The agreement of minimum corporate tax valid worldwide will be the core of debates.

G20 is expected to grant its political support to plans for new regulations where and how much companies are taxed which were approved last week by 130 countries at the Paris-based Organisation for Economic Cooperation and Development (OECD).

The expected deal will include the implementation of a global minimum corporate income tax of at least 15%. That minimum level which the OECD estimates could earn some $150 billion in additional global tax returns, but leaves much of the details to be hammered out.

Officials noted that the two-day meeting in Italy's historic lagoon city will raise a discussion on how to enforce the OECD proposals into practice. The objective is to reach a final agreement at a Rome G20 leaders' summit due in October.

The G20 members account for more than 80% of world GDP, 75% of global trade turnover and 60% of the human population of the planet, including big-hitters United States, Japan, Britain, France, Germany and India. If all goes to plan, the new tax rules should be translated into binding legislation worldwide before the end of 2023.

Ministers may seek assurances from the US Treasury Secretary Janet Yellen that she can win legislative approval for the proposals in a divided US Congress where Republicans and business groups are fighting Joe Biden's proposed tax increases on corporations and wealthy Americans. Aside from tax, ministers will discuss a global economic recovery which is hugely uneven, with wealthy Western countries picking up strongly while developing nations are left behind. IMF chief Kristalina Georgieva delivered the same message this week, saying there was a "dangerous divergence" between wealthy and developing countries as they seek to recover from the COVID-19 pandemic. The G20 will ask the IMF to allocate $650 billion of its reserve asset known as Special Drawing Rights by the end of August, with a recommendation that ways are found to ensure a significant part of the money goes to countries most in need.

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