© Reuters. FILE PHOTO: UK Chancellor of the Exchequer Rishi Sunak meets US Treasury Secretary Janet Yellen (not pictured) in London, UK on June 3, 2021. REUTERS / Hannah McKay
LONDON (Reuters) – Treasury ministers from the Group of Seven Rich Nations said Thursday they needed to make more progress on the fine print of global corporate tax reform in time for an October summit of leaders.
Briton Rishi Sunak said he had called on his G7 colleagues during a virtual meeting to make further technical progress on the reforms, and Treasury Secretary Janet Yellen underlined the need to swiftly implement the new rules.
More than 130 countries agreed this summer to develop new rules for corporate taxation, to introduce a tax rate of at least 15% and to lower national taxes on digital services in favor of the new taxation laws.
Diplomats are now pushing for an agreement on the technical parameters of the reform at the next Group of 20 summit in October.
“I said the G7 must unite to take a leadership role to seek an effective deal in October,” Japanese Finance Minister Taro Aso told reporters.
Noting that the deal was backed by 134 countries accounting for more than 90% of global GDP, Yellen said the new international tax system would help governments invest in their workers and economies while helping to improve the playing field for U.S. Business at the same through their office.
Do more to help vulnerable countries
Sunak said on Twitter (NYSE 🙂 that he has also urged the G7 to support vulnerable countries through the International Monetary Fund’s Special Drawing Rights (SDR) or emergency reserves before finance ministers-central banker talks take place in October.
The Treasury Department said Yellen also called for further efforts by the G7 to improve support for low-income countries hard hit by the COVID-19 pandemic and its economic aftermath.
Yellen urged major economies to lend their SDRs to further support vulnerable countries, the Treasury Department said, but did not provide details on the United States’ own plans.
IMF chief Kristalina Georgieva thanked Sunak and the UK on Twitter for “remarkable progress in enhancing the benefits of the new Special Drawing Rights for countries in need” during the G7 meeting.
A source familiar with the discussions said G7 members supported both the IMF’s existing Poverty Reduction and Growth Trust and a new vehicle proposed by Georgieva, the Resilience and Sustainability Trust, to enable wealthier IMF members to use their reserves donate or lend to more vulnerable countries.
This is good news for the IMF, as some G7 countries initially expressed reservations about the new trust, which could support more than just the poorest countries and cover wider spending, including efforts to combat climate change.
A G7 source said Thursday’s meeting also looked at how to deal with the new Taliban government in Afghanistan.
“We do not want a humanitarian catastrophe in Afghanistan. There must be no famine in Afghanistan,” said the source on condition of anonymity.
Britain holds the rotating presidency of the G7, which also includes Canada, France, Germany, Italy, Japan and the United States. Germany will take over the G7 presidency next year.