G20 Finance Ministers Endorse MNEs Taxations
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The G20 agrees on a historic deal to overhaul the global tax on profits of multinational companies.
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G20 countries
The Ministers of Finance of the G20 countries agreed in a statement on Saturday to "a historic agreement on a more stable and fairer international tax architecture," which envisages the imposition of a global tax of no less than 15% on the profits of multinational companies.
The Ministers of Finance appealed to the reluctant countries to sign, as only 131 out of 139 members of the group, within the framework of the Organization for Economic Cooperation and Development (which includes developed and developing countries), have signed the agreement.
The Ministers of Finance said, "We invite all members of the OECD/G20 Inclusive Framework on BEPS that have not yet joined the international agreement to do so."
He also called on the finance ministers of this group to "swiftly address the remaining issues" and to "finalize the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by our next meeting in October."
"We endorse the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax as set out in the “statement on a two-pillar solution to address the tax challenges arising from the digitalization of the economy,"" said the ministers.
According to the statement, Pillar One targeted "the multinational enterprises (MNEs) with global turnover above 20 billion euros and profitability above 10% (i.e. profit before tax/revenue) with the turnover threshold to be reduced to 10 billion euros, contingent on successful implementation including of tax certainty on Amount A, with the relevant review beginning 7 years after the agreement comes into force, and the review being completed in no more than one year."
Pillar Two includes imposing a minimum effective tax rate of at least 15% on the profits of multinational corporations.
It would be possible for states to tax the overseas profits of their national companies, which pay lower fees abroad, in order to make up the difference.
In late June, the G20 Ministers of Foreign Affairs called for multilateral solutions to global crises, such as the COVID-19 pandemic and climate change, in their first direct meeting in two years.
The G20 member states contribute more than 80% of global GDP, 75% of world trade, and represent 60% of the world's population.
Last April, the G20 countries extended developing countries' debt suspension for 6 months until the end of 2021, as they were affected by the COVID-19 pandemic.
The group confirmed in November 2020 that it would "do everything possible" to contain the pandemic.
