Global minimum tax, first objective achieved at the G20 in Rome

The first day of the G20 leaders' summit in Rome today achieved a first goal: the adoption, after lengthy negotiations, of a global minimum tax on multinationals to balance the international tax system.

"After four years of intense debate, a historic agreement has been reached on a solution based on two pillars to address the tax challenges emerged with the digitalization and globalization of the economy," assured sources of the Italian presidency in turn of the forum of the twenty powers.

The G20 heads of state or government agreed on a global minimum corporate tax of at least 15% to achieve a fairer tax system and prevent them from taking advantage of complacent tax regimes and not paying taxes where they operate.

One of the most enthusiastic was the President of the United States, Joe Biden, who welcomed the agreement and assured that the international community would thus "help people by making companies contribute by paying their share" of taxes.

A minimum tax for the world 

The mechanism, to be adopted by 2030, follows the path already outlined by the Organization for Economic Cooperation and Development (OECD) of a system based on two pillars.

The first establishes that the volume of companies' residual profits, i.e. the amount remaining after the country where the head office is located has kept the tax corresponding to 10% of the profitability, will be distributed among the countries where they operate.

The second establishes a minimum corporate rate of 15% for companies with a turnover of at least 750 million euros.

The OECD has already reported that 136 countries and jurisdictions, covering more than 90 % of world GDP out of the 140 participating in the negotiations, agreed that for the first pillar the figure should be 25 % of this residual profit, after discussions had been going on until now between a range of 20 and 30 %.

This refers to large companies with a worldwide turnover of more than 20 billion euros and a profitability of more than 10 %, and the distribution of profits would be made among the countries where each company has revenues of more than one million euros (250,000 euros in small states).

The aim, the sources added, is to ensure fair, modern and efficient tax rules, which are key to encouraging investment and growth.

A G20 with major absences

The leaders of this forum, whose countries account for 80% of the gross domestic product and 60% of the world's population, met again physically after the pandemic, since the Riyadh meeting last year had to be held virtually.

Leaders such as Biden, the head of the Spanish government, Pedro Sánchez, the President of France, Emmanuel Macron, the British Prime Minister, Boris Johnson, or the outgoing Chancellor of Germany, Angela Merkel, for whom this G20 will be the last, passed through the Roman neighborhood of EUR, completely armored for the occasion.

From Latin America came the Argentine President, Alberto Fernández, who denounced his country's high debt with the International Monetary Fund, and the President of Brazil, Jair Bolsonaro, while Mexico was represented by its Chancellor, Marcelo Ebrard.

However, the summit had two exceptional absences, which in a way put in check the sponsored multilateralism: that of the Russian President, Vladimir Putin, who demanded by videoconference the reciprocal recognition of vaccines between blocs.

And the Chinese president, Xi Jinping, who thousands of kilometers away asked his peers to be "an example" in the reduction of carbon emissions.

Other key issues: health and the environment

Other important points addressed at the "Cloud", a modern Roman congress center, were the management of the coronavirus pandemic, and the leaders committed to deliver vaccines and immunize 70% of the population by 2022.

This is a key issue because the way out of the crisis depends on it and, for this reason, the leaders posed in the family photo with some of the "heroes" of the pandemic, doctors, nurses or Civil Protection workers.
 

On the other hand, the pressing environmental issue was discussed on the eve of the United Nations Summit on Climate Change, which begins on Sunday in the British city of Glasgow.

The climax was provided by Queen Máxima of the Netherlands, who, in a parallel panel on SMEs and women entrepreneurs, asked the leaders if enough was being done for them: "I would say that we can do more," she said.