(Bloomberg) – Negotiations among more than 100 countries to reform global tax burdens are grappling with key issues, as wealthy nations seek to persuade many developing economies to reach a preliminary agreement in the next 10 days.
In the final stretch of the talks, governments around the world are scrambling to safeguard their fiscal sovereignty and get a bigger share of the taxes from the tech giants. The move is making it difficult for officials to convince some key countries, such as India and China, which have shown reservations about the deal.
The technical talks led by the Organization for Economic Cooperation and Development (OECD) aim to reverse decades of tax laws and deals, generate more tax revenue for governments, and address concerns that multinational companies such as Amazon.com Inc. and Facebook Inc. are not paying enough. The deal could also roll back internal digital taxes that some countries have implemented, easing growing trade tensions with the United States.
In early June, the advanced economies of the Group of Seven reached an agreement on the general scheme of creating a global minimum corporate tax of at least 15%, in addition to defining the rules to give more income to the countries where companies do business. sales.
However, before the key OECD meeting on Thursday, some countries outside the G-7 have been dissatisfied with accepting an agreement decided by the rich countries, which creates uncertainty about what kind of consensus can be established in the talks. techniques. Anything that is decided will be considered by the finance ministers of the Group of 20 in Venice next week.
The goal of both meetings is to reach a high-level consensus on the plan’s principles, OECD officials previously said.
Several G7 officials expressed optimism that the talks will overcome obstacles, leading to progress in the G20, although one cautioned that the current state of talks with developing countries means that things could turn out in many ways in Venice.
In the coming days and months, negotiators will face political challenges as they try to reach an agreement that satisfies the 139 countries involved in those talks.
Some nations have argued that the agreement does not go far enough to collect and redistribute tax revenues.
“There is a substantial risk that developing countries will basically get nothing in terms of additional revenue” from the OECD plan, Martin Guzmán, Argentina’s economy minister, said on Monday.
There is also concern about getting some of the world’s largest economies outside the G-7 to sign an agreement.
US Treasury Secretary Janet Yellen spoke with Indian Finance Minister Nirmala Sitharaman on Tuesday to emphasize the “shared interest of both countries in implementing a robust global minimum tax.” An Indian government official told news provider Bloomberg Quint after that call that the country was “in principle” opposed to a common global minimum tax rate.
Another big question is whether China will agree. The country is concerned about its ability to attract high-tech investment under a minimum tax plan, Bloomberg reported in June.
A senior European official said last week that it was difficult to assess what China would demand at the G20 and that there is a risk that the world’s second-largest economy will not easily sign a deal negotiated by the G7 countries, potentially delaying everything. the process for years.
The OECD plan is divided into two separate pillars or broad objectives that together would support a deal. Pillar One has to do with sharing the rights to tax the profits of the world’s largest multinationals, and Pillar Two with the establishment of a global minimum corporate tax.
Most of the plan’s revenue gains will come from Pillar Two, the minimum tax scheme, which could generate an additional $ 150 billion of revenue for governments in combination with proposed changes to the US global minimum tax, he said. Pascal Saint-Amans, the OECD’s top tax official.
Original Note: Global Tax Talks Face 10-Day Sprint for Deal as Hurdles Persist
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