The world’s largest economy has strongly supported a global tax reform agreement that will impose minimum taxes on multinational companies, thereby increasing pressure on a few countries that adhere to the agreement.
The G20 meeting of economic ministers and central bank governors in Venice on Saturday issued a joint communiqué in support of the tax agreement. G7 countries agreed last month Earlier this month, the OECD received support from 130 countries in the talks held in Paris.
The communiqué stated that the agreement was “a historical agreement on a more stable and fairer international taxation structure” and that the G20 invited “all members of the OECD.” .. Countries that have not yet joined the agreement do so”.
It called on all countries participating in the negotiations to “swiftly resolve the remaining issues and finalize the design elements” before the next G20 meeting in October.
US Treasury Secretary Janet Yellen said that the G20 will try to get small countries including Ireland and Hungary to accept the agreement, but this is not important for moving forward.
“Not every country is involved,” she said.
French Finance Minister Bruno Le Maire called the tax agreement “a tax revolution once in a century.”
“International tax reform has been agreed, and there is no turning back,” he said.
The next step in the October G20 meeting will be to determine the globally agreed minimum tax rate and determine how to distribute the share of tax profits among countries.
Eight countries, including Ireland, Barbados, Hungary, and Estonia, have postponed agreeing to a 15% minimum tax, which is supported by the United States, China, India and most EU countries. Other adherents include Sri Lanka, Nigeria, Kenya and Saint Vincent and the Grenadines.
Some low-tax jurisdictions and investment centers, such as the Bahamas and Switzerland, have signed contracts.
Peru did not initially sign the agreement because it did not have a government in place when it was signed, but it has now been signed, with 131 signatories.
Although the political support of the G20 will provide impetus to efforts to reach a final agreement, which is expected to be implemented in 2023, important technical issues still exist and are unlikely to be resolved this weekend.
These include various so-called divestiture agreements, which will allow some countries to use exit agreements to encourage investment.
Another obstacle is expected to be opposition from the Republican Party in the U.S. Congress. President Joe Biden may need Congress to approve at least some elements of the proposal.
Kevin Brady, the top Republican on the House Ways and Means Committee, described the deal as “a dangerous economic surrender that transfers American jobs overseas.”