World leaders will approve an agreement setting a global minimum corporate tax on July 9 and 10 and call for the technical work to be completed so that they can approve the framework for implementation in October, as their draft communiqué shows.
“After many years of discussion and building on the progress made over the past year, we have reached a historic agreement on a new, fair and stable international tax architecture,” the draft says.
She did not mention a specific rate for a global minimum corporate tax or any other key details to be agreed in talks at the Paris-based Economic Cooperation Organization and Development by nearly 140 countries known online next week as the “Inclusive Framework Meeting” .
The details agreed at that meeting will then be sent to finance ministers and central bank governors of the world’s 20 largest economies (G20) for approval at the meeting in Venice on July 9-10.
“We advocate the core elements of the two pillars of profit redistribution of multinational corporations and the global minimum tax as set out in the declaration of the G20 / OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS),” the G20 draft said in anticipation of that Talks next week.
The first “pillar” of the OECD agreement is to ensure that international companies, especially digital giants such as Google, Amazon, Facebook, Apple or Microsoft, pay taxes in countries where they make profits and not in low-tax areas that are selected were made to minimize tax payments.
The second “pillar” is a global minimum level of corporate tax so that governments do not compete through tax cuts to attract investment from large multinationals.
G7 finance ministers earlier this month supported a global minimum tax rate of at least 15% and thresholds for sharing the rights of governments to tax profits from cross-border trade, but the G20 draft made no reference to that figure.
“We call on the G20 / OECD Inclusive Framework on BEPS to quickly complete the remaining technical work in order to approve the framework for the implementation of the two pillars by our next meeting in October,” says the draft that was viewed by Reuters.
CLIMATE AND CLEAN ENERGY
In the run-up to the talks organized by the OECD, intensive bilateral talks are currently being held to bring the countries on par with strong opposition from low-tax countries, which in Europe include Ireland, the Netherlands, Hungary and Luxembourg.
The G20 draft also supported G7 efforts to force banks and businesses to disclose their exposure to climate-related risks:
“Quality data and consistent disclosure frameworks are crucial to address climate-related financial risks and mobilize sustainable finances,” says the G20 draft.
“We recognize that a more comprehensive assessment of environmental and climate-related macroeconomic risks can help develop innovative solutions to make our economies more sustainable, resilient and inclusive,” it said.
The G20 will also agree to invest in sustainable infrastructure and new technologies for clean energy sources, “including phasing out inefficient fossil fuel subsidies and other carbon pricing mechanisms,” according to the draft.
The draft also confirms the April G20 agreement to combat protectionism and “promote concerted efforts to reform the World Trade Organization”.