Berlin, July 9, (dpa/GNA) – The finance ministers of the G20 countries kick off two days of talks on Friday, with the minimum global tax rate for businesses on top of the agenda.
In principle, 131 countries agreed to guarantee a minimum tax rate for companies of at least 15 per cent, as well as ensuring that large corporations pay taxes where they make their sales. However, EU members Ireland, Hungary and Estonia are not on board so far.
German Finance Minister Olaf Scholz said head of the meeting he was “very confident” agreement about the tax reform could be reached within the European Union.
“Because actually the thing is that in the past we have achieved all agreements about tax evasion on a global level first and then the EU reproduced it too, also the countries that were sceptical,” Scholz said in an interview with broadcaster ARD aired on Friday.
Earlier, Scholz had described the agreement as “colossal progress” in tackling tax avoidance practices.
Gabriel Felbermayr, head of the Kiel Institute for the World Economy, also said there were great chances the minimum tax would be implemented, calling the agreement a “great breakthrough.”
But he also sees challenges ahead for the finance ministers, as the countries’ tax systems are very different. “Now it is about finalizing details. And it will also be asked how to unify the definition of profit. That’s much more difficult than to agree on a 15-per-cent tax rate,” Felbermayr said.
The minimum tax rate aims to prevent international corporations from shifting profits around the globe in order to pay as little tax as possible. This especially concerns large digital companies who have been criticized for paying little tax.
The reform is to come into force in 2023, although agreements on EU and national level would be necessary for this.
Other topics on the agenda of the G20 ministers include the economic recovery after the coronavirus crisis, climate policies and fair distribution of Covid-19 vaccines to developing and emerging countries.
GNA