G20 endorses global corporate minimum tax, discusses COVID-19 vaccines and economic recovery at Rome summit

  The G20 countries make up about 80 per cent of the world’s GDP.(Reuters: Yara Nardi)            Leaders of the world’s biggest economies have endorsed a global minimum tax on corporations, a linchpin of new international tax rules aimed at blunting the edge of fiscal paradises amid skyrocketing profits of some multinational businesses.

G20 finance ministers in July had already agreed on a 15 per cent minimum tax, and the plan has been awaiting formal endorsement at the summit of the world’s economic powerhouses on Saturday, local time, in Rome.

It comes after 136 countries in October reached a deal on a minimum tax on global corporations — including internet giants such as Google , Amazon, Facebook, Microsoft and Apple — to make it harder for them to avoid taxation by establishing offices in low-tax jurisdictions.

In a statement, US Treasury Secretary Janet Yellen said that the deal on new international tax rules, with a minimum global tax, “will end the damaging race to the bottom on corporate taxation”.

The move by the Group of 20 summit in Rome fell short of US President Joe Biden’s original call for a 21 per cent minimum tax.

However, Mr Biden tweeted his satisfaction at the deal.

“Here at the G20, leaders representing 80 per cent of the world’s GDP — allies and competitors alike — made clear their support for a strong global minimum tax,” Mr Biden said in the tweet.

“This is more than just a tax deal — it’s diplomacy reshaping our global economy and delivering for our people.”

Tax deal ‘completely eliminates’ incentive to avoid tax: OECD

The agreement aims to discourage multinationals from stashing profits in countries where they pay little or no taxes.

These days, multinationals can earn big profits from things such as trademarks and intellectual property.

Then these companies can assign earnings to a subsidiary in a tax haven country.

Briefing reporters midway through the summit, German Chancellor Angela Merkel said: “There are good things to report here. The world community has agreed on a minimum taxation of companies. That is a clear signal of justice in times of digitalisation.”

Mathias Cormann, secretary-general of the Paris-based Organization for Economic Cooperation and Development (OECD), said the deal clinched in Rome would “make our international tax arrangements fairer and work better in a digitalised and globalised economy”.

The minimum rate “completely eliminates the incentive for businesses around the world to restructure their affairs to avoid tax”, Mr Cormann contended.

On other issues crucial to fairness across the globe — including access to COVID-19 vaccines — the summit on the first of its two days heard pleas to boost the percentage of those in poor countries being vaccinated. ABC NEWS