5 Minutes, by Read this article (Corrects spelling of World Health Organization in 19th paragraph) The 394-foot (120-meter) mega-yacht “A” of Russian billionaire Andrey Melnichenko is seen berthing at a port against the “Reflections at Keppel Bay” condominium in Singapore on April 18, 2012. VENICE, ITALY/REUTERS/Tim Chong (Source: Reuters) At a meeting on Saturday, finance ministers from the G20 large nations supported a landmark effort to prevent multinational corporations from moving earnings to low-tax havens. They will also warn that coronavirus strains endanger the global economic recovery. They also emphasized the importance of ensuring equitable vaccination access in developing nations. However, a draft statement to be signed during the summit in Venice, Italy, did not include any specific new ideas on how to do so. The tax accord was expected to be the most significant new policy move to emerge from their discussions. It brings an end to eight years of bickering over the tax problem, and the goal is for country leaders to give it their final approval at the G20 conference in Rome in October. To discourage multinational corporations from looking for the lowest tax rate, the agreement would set a global minimum corporate tax of at least 15%. It would also change the way highly profitable corporations like Amazon and Google are taxed, based in part on where their products and services are sold rather than where their headquarters are located. All G20 economies were on board for the pact, according to German Finance Minister Olaf Scholz, but US Treasury Secretary Janet Yellen said a few smaller countries still opposed to it, such as low-tax Ireland and Hungary, will be persuaded to sign up by October. “We’ll strive to accomplish that,” she added, adding that “it’s not necessary for every country to be on board.” “This agreement incorporates a form of enforcement mechanism that may be used to ensure that recalcitrant countries cannot undermine – use tax havens to undermine the implementation of this global agreement.” The G20 members, which include major players such as the United States, Japan, the United Kingdom, France, Germany, and India, account for more than 80% of global GDP, 75% of global commerce, and 60% of the world’s population. Kenya, Nigeria, Sri Lanka, Barbados, and St. Vincent & Grenadines are among the countries that have not signed on, in addition to European Union holdouts Ireland, Estonia, and Hungary. A debate in the US Congress over President Joe Biden’s proposed tax increases on corporations and rich Americans, as well as a separate EU plan for a digital charge on IT giants, could cause complications. Even though the fee is primarily directed at European corporations, US Treasury officials argue the EU plan is incompatible with the larger global agreement. Aside from the tax accord, the G20 will address worries that the rapid spread of the Delta coronavirus type, as well as unequal access to vaccines, constitute a threat to global economic recovery. “However, the recovery is typified by substantial divergences across and within countries and is subject to downside risks, in particular the development of novel forms of the COVID-19 virus and varying rates of vaccination,” the document continues, citing improvements in the global outlook thus far. According to Reuters, new COVID-19 infections are increasing in 69 countries, with the daily rate increasing since late June and now reaching 478,000. “Everywhere throughout the world, we all have to enhance our vaccination performance,” French Finance Minister Bruno Le Marie told reporters. “We have extremely optimistic economic expectations for the G20 economies, and the possibility of a fresh wave is the only roadblock to a swift, solid economic recovery.” Kristalina Georgieva, the IMF’s Managing Director, said the globe was experiencing “a worsening two-track recovery,” owing in part to disparities in vaccine availability. “We are at a critical juncture that necessitates immediate action by the G20 and policymakers throughout the world,” she said in a statement released in advance of the conference. While the declaration emphasized support for “equitable global sharing” of vaccines, it did not offer any tangible new measures, instead acknowledging the IMF, World Bank, World Health Organization, and World Trade Organization’s suggestion for $50 billion in new vaccine financing. The IMF is also pressuring G20 members to agree on a clear mechanism for rich countries to donate $100 billion in newly minted IMF reserves to poorer nations. Geoffrey Okamoto, the IMF’s First Deputy Managing Director, told Reuters that his goal was to be able to propose a feasible solution for channeling freshly issued Special Drawing Rights to countries in need by the end of August, when a new $650 billion allocation is finished. Additional information is available. By Gavin Jones, Christian Kraemer, and Francesco Guarascio; Mark John wrote the script. Gareth Jones did the editing./n
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