Corporate Tax

G20 chief monetary officers help worldwide corporate tax reform

Group of 20 major economies’ chief financial officers are expected to endorse a series of corporate tax reforms at their meeting in Washington on Wednesday to combat tax avoidance by tech giants and other international corporations.

According to sources, G-20 finance ministers and central bank governors will reaffirm their collaboration in 2023 on introducing a global minimum corporate tax rate of 15 percent and a system for multinational corporations who can pay their fair share of taxes regardless of their physical presence on the cause trusted.

File photo shows a meeting of the Group of 20 CFOs in Italy in July 2021. (Photo courtesy of the UK Treasury) (Kyodo)

The G-20 members will issue a joint statement after their one-day face-to-face meeting on the sidelines of the World Bank and International Monetary Fund meetings, with approval at a summit meeting in Rome later this month, the sources said.

Japanese Finance Minister Shunichi Suzuki will stay in Japan as he will be attending a diet session.

The meeting of G-20 chiefs of finance comes after 136 economies led by the Organization for Economic Co-operation and Development agreed last week on the reform package to overhaul the centuries-old international system.

The momentum to set new universal tax rules for cross-border businesses has increased in recent years amid mounting criticism that large US tech companies like Google LLC and Apple Inc. are making profits in low-tax countries.

The governments that join the agreement, including all G-20 members and several low-tax countries that initially opposed it, such as Ireland and Hungary, are due next year to formulate a multilateral treaty while preparing the necessary revisions of domestic laws and regulations to put the new rules into practice in 2023.

CFOs are also expected to discuss the global economic recovery after the initial shock of the coronavirus pandemic and concerns about accelerating inflation due to higher raw material costs, including crude oil.

The topics of the financial talks will be on the agenda of the two-day G-20 summit on October 30th. Japanese Prime Minister Fumio Kishida, who took office this month, will virtually attend a parliamentary election on October 31st.

After the G20 talks, the CFOs of the Group of Seven Economies will meet and are expected to adopt common central bank guiding principles on digital currencies calling on issuing countries to ensure transparency and data protection.

The move by the UK, Canada, France, Germany, Italy, Japan and the United States, as well as the European Union, comes as China takes the lead in issuing a CBDC with its pilot programs already underway to develop a digital yuan.

The G-20 consists of the G-7 countries and the European Union as well as Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

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