Finance ministers from the G20 richest nations resumed discussions in Venice on Saturday to give the green light to a historic deal to tax multinational companies more fairly.
The framework for reform, including a minimum global corporate tax rate of 15 percent, was agreed by 131 countries earlier this month and could be in place by 2023.
Hailed by those involved as historic, it aims to prevent a race to the bottom as countries compete to offer the lowest tax rates to attract investment, with many multinationals as a result paying derisory levels of tax.
“This minimum tax on companies must be ambitious,” French Finance Minister Bruno Le Maire told AFP on Friday, adding that the meeting of the G20 – the countries with the 19 biggest economies and the European Union – represented a unique opportunity.
The countries representing 85 percent of global wealth were seeking a deal “for the 21st century, which will allow for the fair taxation of digital giants which largely escape taxation, which nobody can accept,” he said.
Final agreement on the minimum rate is not expected until the run-up to the G20 leaders’ summit in Rome in October.
But the Venice talks are an opportunity to thrash out further details and exert pressure on those who have not yet signed up to the deal, struck under the auspices of the Organization for Economic Cooperation and Development (OECD) – a club of 38 wealthy economies.
The United States, France and Germany are among several countries pressing for a higher rate, while aid agencies including Oxfam also argue that 15 percent is too low.
But with some nations opposed even to this – EU member Ireland lured Apple and Google to Dublin with its low tax rates – there is not likely to be any change to the rate.
“We are really now on the way” to a deal that “will be finalized shortly,” German Finance Minister Olaf Scholz told CNBC television.
The minimum rate is expected to affect fewer than 10,000 major companies, those with an annual turnover of more than 750 million euros ($890 million).
It is one of two so-called pillars of global tax reform that have been under negotiation for years, and have been given new impetus under US President Joe Biden.
The other would give countries the right to tax multinationals on profits they earn from their activities in the nation, and would initially apply to the top 100 or so companies.
It is targeted at technology giants such as Google, Amazon, Facebook and Apple, but could also affect companies like energy giant BP, which is present in 85 countries.
According to a draft obtained by AFP of the final statement, which is still being discussed, the G20 ministers will “endorse” the OECD’s “historic agreement on a more stable and fairer international tax architecture.”