Finance ministers and central bank governors from G20 economies reached a landmark agreement over the weekend on a new global corporate tax reform plan, approving a minimum levy on multinational corporations and a reallocation benefits between countries.
It marked a big step forward in the process of global tax reform after years of discussions. After the G20 members’ meeting in Venice, Italy on Saturday, they issued a statement calling the new framework “a more stable and fairer international tax architecture”. However, the minimum corporate tax rate was not fixed.
Earlier this month, the Global Corporate Tax Reform Initiative, designed as a two-pillar solution and proposing a minimum tax rate of 15% for large multinational corporations, won support from 132 countries and jurisdictions, including China. Experts expect the final plan to be approved at the next G20 meeting in October.
“This indicates that great strides have been made in reforming the international corporate tax system,” said Jeff Yuan, manager of transfer pricing services at PwC Asia-Pacific.
“However, there are still uncertainties in the final plan, and we are not sure when to reach a global consensus as a significant amount of political and technical work remains to be completed by October 2021, with issues of key design yet to be resolved. “
China’s strong economic fundamentals and institutional advantages can ensure that the country takes the lead in global tax reform, said Bai Yanfeng, a professor at Beijing Central University of Finance and Economics.
Compared with some advanced economies, which may take longer to implement the new rules, China is able to act more effectively. As China is emerging as the world’s largest consumer market, the country will also retain its advantages in attracting international capital, Bai said.
“The most important thing is to do our own things well. When Chinese companies are competitive enough, and consumers around the world pay more attention to products made in China, we will be full of confidence in both the part market and the fiscal share, ”he added. Bai said.
Yuan said a July 1 statement from the Organization for Economic Co-operation and Development as well as the G20 communique made it clear that while implementing the new international tax rules, countries would remove taxes on digital services and other similar measures imposed on businesses. These cuts will be good news for multinational companies, especially high-tech companies, Yuan said.
The new rules and their potential impacts still require further analysis. Multinational companies will need to conduct more impact assessments and scenario planning based on the information contained in the OECD statement and review options to mitigate the potential impact of the new rules, he said. he declares.
Yi Gang, governor of the People’s Bank of China, the central bank, attended the G20 meeting on Friday and Saturday via video conference. Yi revealed that the G20 task force on sustainable finance, co-chaired by the central bank of China and the US Treasury this year, is working on a draft plan on medium-term sustainable finance.
This year, the group is focusing on tasks such as green finance and green industries, streamlining information disclosure and reporting standards related to climate and environment as well as multilateral development supporting the Accord. of Paris, according to a press release from the PBOC.
Yi called on G20 members to jointly improve standards for classification and rating of environmental, social and governance investments and improve climate information, which will help promote global green finance markets and foster transition towards low carbon emissions.
The G20 meeting also discussed central bank digital currencies for cross-border payments. He pointed out that no so-called “global stablecoins” – a new type of crypto-asset designed to maintain a stable value against specified assets – should start operating, until all legal requirements are met. regulatory and supervisory requirements are properly met, the statement said.