Finance ministers and central bankers from the Group of 20 wealthy countries will meet in person in Venice for the first time since the start of the COVID-19 pandemic, where corporate tax reform will be a primary priority.
The G20 is likely to give its political support to ideas for new rules on where and how companies are taxed, which were supported by 130 countries at the Organization for Economic Cooperation and Development in Paris last week (OECD).
China and India, on the other hand, have chosen to have a virtual presence in the lagoon city, with the Arsenal area closed to tourists and locals for the two-day event.
The agreement calls for a global minimum corporate income tax of at least 15 percent, which the OECD estimates could raise an additional $150 billion in global tax revenue, but it leaves many details to be worked out.
The minimum rate is one of two “pillars” of global tax reform that has been under work for years. The other intends to tax multinational corporations where they make their profits, not where they are headquartered and is particularly targeted at tech giants like Google, Amazon, Facebook, and Apple, who pay low tax rates in comparison to their earnings.
The G20 members, which have major players such as the United States, Japan, the United Kingdom, France, Germany, and India, account for more than 80 percent of global GDP, 75 percent of global commerce, and 60 percent of the world’s population. If everything goes according to plan, the new tax laws will be implemented globally by the end of 2023.
Aside from tax, ministers will also discuss the uneven recovery of the global economy, with wealthy Western countries picking up strongly while developing nations are left behind, as warned by the International Monetary Fund chief, Ms. Kristalina Georgieva of ‘dangerous divergence’.
By the end of August, the G20 will urge the IMF to deploy $650 billion of its reserve asset, known as Special Drawing Rights, with the recommendation that a large portion of the money goes to the poorest countries.