G20 agrees on global taxation reforms – COVID vaccines also discussed
World leaders at the G20 Summit in Rome Saturday agreed on the global minimum tax (15%), which 136 countries had previously endorsed, it was announced.
“There is good news to report here: The world community has agreed on a minimum taxation for companies,” German Chancellor Angela Merkel said. “This is a clear signal of fairness in the age of digitization,” she added.
Germany’s Finance Minister Olaf Scholz, who will most likely become her successor, had pushed the project forward on an international level in recent years.
According to the new taxation strategy, some of the tax rights for the largest and most profitable companies in the world will be transferred to the countries where they do business but often pay no taxes. So far, states have missed out if companies are not represented with employees, offices or machines. Individual countries had therefore introduced digital taxes without coordination, which was primarily directed against companies such as Amazon, Google, Facebook or Apple in the United States, which in turn raised concerns about countermeasures by Washington. Part of the agreement is to strike those digital taxes.
Under the new scheme, taxation rights of US $ 125 billion will be redistributed, thus affecting almost 100 international companies, both digital giants and highly profitable stock corporations, such as luxury goods manufacturers.
The second pillar of the reorganization is a global minimum tax of 15%. The OECD expects that the international community will earn an additional US $ 150 billion.
The G20 leaders agreed to the adoption of a global minimum corporate tax of at least 15%, as a measure to achieve a fairer tax system and prevent companies from benefiting from complacent tax regimes and not paying taxes in the countries where they operate.
All leaders supported a global minimum tax. The president, Joe Biden, highlighted the importance of this historic agreement during his intervention, according to the White House note.
Biden further stated that the international community, thanks to the agreement on this global minimum tax, will support people by ensuring that companies will contribute by paying their fair share.
The other main topic Saturday was COVID-19 vaccination. Chinese President Xi Jinping called on the international community through hsi video appearance to accelerate the recognition of vaccines and also to strengthen cooperation to defeat the pandemic.
Xi also proposed an initiative to consolidate cooperation in vaccine research and development, provide financial support to manufacturers involved in joint projects, and ensure fair distribution of drugs to less favored nations. He also called to support the World Trade Organization in making a prompt decision about the exemption of intellectual property rights on immunogens against Covid-19, to encourage technology transfer in this area and the stable flow of materials.
World leaders also discussed the approval of the new issuance of special drawing rights (SDR) by the International Monetary Fund (IMF). Argentine President Alberto Fernández claimed the current surcharge system “prioritizes speculation on the development of peoples, which in his country condemns generations.
Italian Prime Minister Mario Draghi issued a strong call to accelerate the delivery of COVID-19 immunizers to poor countries. He said the huge differences among countries were morally unacceptable,” as he pointed out only 3% of people in the world’s poorest countries had been vaccinated, while 70% in rich countries have received at least one dose.