The world’s largest economies this weekend will put pressure on the hostile nations who refuse to sign a global tax reform deal that would impose a minimum tax on multinational corporations.
G20 economics ministers and central bankers met in Venice on Friday to discuss the proposal, agreed by the G7 countries last month and supported by 130 countries in talks hosted by the OECD in Paris earlier this month.
They are expected to officially endorse the deal that will force the world’s largest multinationals to pay a minimum global corporate tax rate in a communiqué released Saturday after the meeting.
The OECD proposal also seeks to create a system whereby countries tax part of the profits booked by large corporations based on where they were made.
A draft communiqué, leaked on Friday and endorsed to the Financial Times by a G20 official, urges all countries adhering to the deal until the G20 leaders meet in Italy in October to give in.
The exact wording of the communiqué has yet to be finalized, officials from several G20 countries said, but one official from a large country said that the G20’s approval of the deal would mean “no going back”.
Eight countries, including Ireland, Barbados, Hungary and Estonia, have held back on the 15 percent minimum tax agreement, which is supported by the US, China, India and most EU countries. Other holdouts are Sri Lanka, Nigeria, Kenya, and St. Vincent and the Grenadines. Some low-tax countries and investment centers such as the Bahamas and Switzerland have already registered.
Peru did not originally sign because it did not have a government at the time of the agreement, but it has now and has 131 signatories to date.
While political support from the G20 will give a boost to efforts to reach a final deal, which is expected to be implemented by 2023, key technical issues remain and are unlikely to be resolved this weekend.
These include various so-called “carve-out” agreements that would allow some countries to use opt-outs from the deal to encourage investment.
Another hurdle is likely to be the Republican opposition in the US Congress; President Joe Biden is likely to need Congressional approval for at least some elements of the proposal.
Kevin Brady, the senior Republican on the House of Representatives Committee on Ways and Means, has described the deal as “a dangerous economic surrender that sends US jobs overseas.”