The 20 largest countries on the planet plan to give free rein to the 15% tax to multinationals during the summit that they hold this Friday and Saturday in an armored Venice with return of tourists, under the Italian presidency of the G-20.
The arrival of President Joe Biden to the White House was decisive in promoting the reform of a tax on multinationals, demonstrating once again that any decision or initiative by the United States tends to have repercussions in the rest of the world as well.
The Secretary of the United States Department of the Treasury, Janet Yellen, has worked to achieve an agreement between 130 countries, which represent 90% of the world’s Gross Domestic Product. Among them they fought over the initiative of a “global minimum tax” to apply it to the profits of companies operating abroad. This is to prevent multinationals, especially the giants such as Google, Amazon, Facebook and Apple, especially benefited from the Covid-19 pandemic, from continuing to pay ridiculous amounts of taxes, out of proportion to their large profits.
It is intended that this “global minimum tax” be at least 15% on the profits of multinationals, although the possibility of setting a somewhat higher quota is discussed (at the beginning the Secretary of the Treasury Janet had set 21%, finding strong opposition from Republicans and objections in many countries). That planetary tax will have to be paid from 2023 if multinationals exceed 20,000 million euros in global turnover. When this tax comes into force, the “web tax” would have to disappear, as requested by the United States, that is to say, the digital fees that some countries, such as Spain, France and Italy, have recently charged to large multinationals: Facebook, Apple, Google, Amazon, Apple and others.
According to calculations by the Organization for Economic Cooperation and Development (OECD), the “global minimum tax” could generate added income to countries worth 150,000 million euros. The United States expects to enter its public coffers about 25,000 million euros a year. Italy could raise between 6.5 and 8.5 billion euros. These amounts are much higher than those now entered through the “tax web”, which in the case of Italy will allow 590 million euros to enter this year.
Opposition from some countries
It has not been easy to reach this agreement, which will undoubtedly be historic. In total there are nine countries out of 139 that are still resisting: three Europeans – Ireland, Hungary and Estonia – in addition to Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya. In some of them the multinationals have “hidden” themselves. Google and Facebook, for example, have been based in Ireland paying 12.5% taxes, but without paying fees where they sold and invoiced their own services. Very striking is also the case of Hungary, whose prime minister, Viktor Orbán, lowered taxes from 19% to 9% to attract international investment and can put obstacles in the European negotiation, where unanimity is required. The German Finance Minister, Olaf Scholz, has already warned that “also the countries that are contrary will have to adapt to the new agreement.”
Fight against corruption and tax havens
Precisely, for the debates at the summit in Venice, the Secretary of the Treasury has raised the need to combat national and international corruption that takes refuge in tax havens. The fight against that corruption is defined by the American president, Joe Biden, like “a vital interest for the security of the United States”. Keep in mind that the hidden treasures that multinationals have in tax havens are equivalent to the Gross Domestic Product (GDP) of a country like Italy. From Jersey to the Netherlands, large corporations have accumulated more than $ 2 trillion in profits while avoiding paying taxes. Every year 700,000 million dollars are moved to avoid the rates, according to data from the United States Treasury, in March 2021.
Recovery after the pandemic
There are other topics of interest on the G-20 agenda. A relevant chapter in the debate of the finance ministers on economic growth and the vaccination campaign against Covid, essential for the recovery after the pandemic. The message of the US Secretary of State in Venice is very strong: We must continue with large public investments to stimulate the economy. Janet Yellen has urged at the summit not to prematurely withdraw interventions in support of economies. Brussels agrees that the needs of the recovery take priority, over the fears raised by some price rises with an impact on inflation, especially at a time when social inequalities are increasing due to the pandemic.
These differences in the economic recovery have been underlined by the general director of the International Monetary Fund, Kristalina Georgieva: “The global recovery – he said – is in line with the projections of a growth of 6% this year, led by the United States and China. However, many economies lag further behind. “
The debate on climate is also on the Venice agenda. There is agreement in principle on the damage caused by global warming, but the G-20 leaders are still struggling to find an agreement on how to combat it. With Biden, the United States has regained centrality in the debate, lost under the presidency of Donald Trump. Europe follows its “green” agenda, but China is particularly concerned, which continues to be the planet’s biggest polluter.