Global Tax Reform Tops G20 Meet In Venice

G20 finance ministers gathered Friday in Venice under tight security, with global tax reform at the top of the agenda as the world's biggest economies seek to ensure multinational companies pay their fair share.

Ministers and central bankers from the 19 richest countries and the European Union met in the lagoon city to discuss the global economic recovery after Covid-19, climate change and notably plans to introduce a new minimum tax on international firms.

All the countries have already signed up to a framework for global tax reform agreed on July 1 among members of the Organisation for Economic Cooperation and Development (OECD), notably a corporate tax rate of at least 15 percent.

They are now seeking a political deal to help ensure the agreement -- aimed at ending tax havens and stopping global companies benefiting as nations compete to offer the lowest rates -- becomes a reality.

"Now is the time for the international community to rally together and build on this momentum," British finance minister Rishi Sunak said.

The minimum rate 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 the US presidency of Joe Biden.

The other aims to tax multinationals where they make their profits, not where they are headquartered.

It is particularly aimed at technology giants such as Google, Amazon, Facebook and Apple, who pay derisory levels of tax compared to their income.

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".

Final agreement on the minimum tax 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 OECD deal, which so far has been backed by 131 countries.

EU members Estonia, Hungary and Ireland, which have all used low tax rates to attract investment, are among the holdouts.

Several countries by contrast are pushing for a higher rate than 15 percent, including Argentina, France, Germany and the United States.

"This minimum tax on companies must be ambitious," French Finance Minister Bruno Le Maire told AFP on Friday.

He said the G20 offered a chance for countries representing 85 percent of global wealth to reach "agreement on international taxation for the 21st century, which will allow for the fair taxation of digital giants which largely escape taxation, which nobody can accept".

However, others noted that going above 15 percent would be a hard sell.

"We must be realistic," said a German government source. "Other countries already have a problem with this level."

US Treasury Secretary Janet Yellen, European Central Bank (ECB) chief Christine Lagarde and Russian finance minister Anton Siluanov were among those at the two-day meeting in Venice, while China and India attended virtually.

It was the G20 finance ministers' first in-person meeting since February 2020, when coronavirus began sweeping across the world.

They are expected on Saturday to give more details of how they will support an initiative by the International Monetary Fund (IMF) to increase aid to countries struggling to cope with the pandemic.

The IMF's executive board has backed increasing its special drawing rights (SDRs) by $650 billion (548 billion euros), the biggest ever such increase.

SDRs are international reserve assets created by the IMF that provide these countries with extra liquidity.

According to the draft statement, the G20 ministers will call for "contributions from all countries able to do so to reach an ambitious target in support of vulnerable countries" -- without specifying a number.

UN Secretary General Antonio Guterres on Friday hailed the IMF's action and urged G20 members to show "solidarity" towards developing countries.

The talks in Venice will also cover the subject of climate change, with Yellen calling Friday on her G20 counterparts to act "immediately" to decarbonise their economies.