India to push for hike of windfall tax on multinationals: Reuters
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According to reports, New Delhi wishes to alter the historic 2021 corporate taxation agreement in order to gain a larger share of taxes from multinational corporations.
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Finance Minister of India Nirmala Sitharaman arrives to attend G-20's 3rd Finance Ministers and Central Bank Governors meeting in Gandhinagar, India, on Monday, July 17, 2023. (AP)
According to Reuters, India may demand an increase in the percentage of taxes multinational corporations must pay in the nations where they operate under the 2021 corporate taxation agreement, which is set to take effect next year.
Reports say New Delhi would propose the adjustment at the G20 finance meeting this week in Gujarat.
The 2021 agreement was signed by the G20 countries and the countries of the Organization for Economic Cooperation and Development (OECD), and its members currently total more than 140 countries and jurisdictions, accounting for more than 90% of global GDP.
Finance ministers and central bank chiefs from G20 countries convened on Monday to discuss important topics, such as debt restructuring, multilateral bank reform, and finance for addressing climate change, with the aim of revitalizing the global economy.
Nirmala Sitharaman, the Indian Finance Minister and summit chair, emphasized the responsibility of steering the global economy toward sustainable and inclusive growth, highlighting that one of the key focuses of the two-day agenda is reaching a consensus on addressing the challenges posed by increasing levels of debt.
The pact changes how governments tax multinational corporations such as Apple and Google, which operate in numerous jurisdictions and, hence, may record profits in low-tax nations. The agreement imposes a minimum 15% tax on these corporations, with an extra 25% tax on 'excess profits' - yearly sales exceeding $22 billion that surpass 10% growth yearly.
Reuters reported that India, on the other hand, expects considerable increases in the tax paid in the nations where the corporations operate. The article did not indicate the size of the increase India is requesting.
According to one source, “India has made suggestions to get its due share of taxing rights on excess profits of multinational companies."
Reports say New Delhi intends to propose that withholding tax, which is collected by businesses when they make payments to suppliers and workers and then returned to the tax authorities, be decoupled from the excess profit tax principle. Under the existing agreement, nations balance their portion of taxes with withholding tax.
India has already submitted similar ideas to the OECD, and they will be reviewed during the G20 summit on Monday and Tuesday.
