G20 puts an end to tax crackdown, warns of virus variants Reuters

(Corrects the spelling of the World Health Organization in paragraph 19)

By David Lawder and Leigh Thomas

VENICE, Italy (Reuters) -Financial leaders of major G20 economies approved a major move to prevent multinationals from taking profits to low-tax havens in talks on Saturday, where coronavirus variants warn of threatening global economic recovery.

They also acknowledged the need to ensure fair access to vaccines in the poorest countries. But the draft communiqué at the meeting in the Italian city of Venice did not contain a specific new proposal on how to do so.

The tax deal would be the biggest new policy initiative to emerge from their talks. It overcomes eight years of conflict with the tax issue and aims to give national leaders a final blessing at Rome’s October G20 summit.

The treaty would impose a global corporation tax of at least 15% to prevent multinationals from buying the lowest tax rate. Also, high-profit multinationals like Amazon (NASDAQ 🙂 and Google (NASDAQ 🙂 would change the way they collect taxes, based in part on where they sell products and services, rather than locating them at their headquarters.

German Finance Minister Olaf Scholz confirmed to reporters that all G20 economies were in favor of the treaty, and that US Secretary of the Treasury Janet Yellen would still be encouraged to sign some small countries that oppose it, such as low-tax Ireland and Hungary. up for October.

“We will try to do that, but I have to stress that it is not essential that all countries be on board,” he said.

“This agreement has some sort of enforcement mechanism in place to ensure that it is not capable of harming the countries that are affiliated with it, using tax havens that undermine the functioning of this global agreement.”

G20 members account for more than 80% of the world’s gross domestic product, 75% of world trade and 60% of the world’s population, including major hitters in the United States, Japan, Britain, France, Germany and India.

Along with Ireland, Estonia and Hungary in the European Union, other countries that have not signed are Kenya, Nigeria, Sri Lanka, Barbados and Saint Vincent and the Grenadines.

Among other sticky points, President Joe Biden in the US Congress could cause problems in the fight over tax increases for corporations and wealthy Americans, as a plan to separate the digital tax on EU technology companies could also be affected.

U.S. Treasury officials have said the EU plan is not in line with a comprehensive global agreement, although the tax is largely aimed at European companies.

TWO-TRACK RECOVERY

Beyond the tax deal, the G20 will address concerns that variants of the rapidly spreading Delta coronavirus, along with unbalanced access to vaccines, pose risks to global economic recovery.

Citing improvements to the overall outlook so far, the draft adds: “However, the recovery is highly divergent between countries and domestic countries and continues to pose adverse risks, particularly the spread of new and different rates of COVID-19 virus vaccine.”

Reuters reports that when COVID-19 reports new infections it rises in 69 countries, the daily rate has been rising since the end of June and now stands at 478,000. https://graphics.reuters.com/world-coronavirus-tracker-and-maps

“We all need to improve vaccine performance in all parts of the world,” French Finance Minister Bruno Le Marie told reporters. “We have very good economic forecasts for the G20 economies and the only obstacle to a quick and strong economic rebound is the risk of a new wave.”

Kristalina Georgieva, the NDF’s chief executive, said the world has a “worse two-way recovery” due to differences in vaccine availability.

“This is a critical moment that calls for urgent action by G20 and policy makers around the world,” he said in an appeal at the end of the meeting.

Although the communication stressed support for a “fair shared world” of vaccines, it did not propose any specific new measures, the IMF, the World Bank, the World Health Organization and the World Trade Organization only considered a $ 50 billion recommendation to fund new vaccines.

The IMF is urging G20 countries to decide on a clear path so that rich countries can provide $ 100,000 billion worth of newly reduced IMF reserves to poorer countries.

Geoffrey Okamoto, the IMF’s first chief executive, told Reuters his goal was to be able to present a viable option to focus on countries that need newly issued special rights by the end of the new $ 650 billion endowment by the end of August.

(Additional news by Gavin Jones, Christian Kraemer, Francesco Guarascio; writing by Mark John published by Gareth Jones)