As published on: bqprime.com, Wednesday 19 July, 2023.
G20 finance ministers on Tuesday discussed strategies to implement strategies for overhauling the global tax norms to ensure that multinational companies pay taxes wherever they operate. The two-day G20 finance ministers and central bank governors meeting being held under India's Presidency also discussed ways to help low and middle income countries reeling under huge debt burden.
The meeting being chaired by Finance Minister Nirmala Sitharaman invited views on the way forward in international taxation with regard to implementation of measures to check tax evasion. "Finance Ministers and Governors were also invited to discuss strategies for capacity building to support implementation of 'Two Pillar Solution' and enhancing global #taxtransparency under #G20India Presidency,the Finance Ministry tweeted. The proposed two-pillar solution consists of two components, including re-allocation of multinational companies' additional share of profit to the market jurisdictions where they operate.
The second component is about having a global minimum tax of 15% for the multinational companies. The Organisation for Economic Co-operation and Development in an outcome statement last week said that a few jurisdictions have expressed concerns 'with some specific items' in the Multi Lateral Convention. "Efforts to resolve these issues are underway with a view to prepare the MLC for signature expeditiously," the OECD said. India has been calling for G20 countries to ensure that the developing nations are guarded against any "unintended consequences" of the proposed global minimum tax deal.
Developing countries make up almost one-third of the membership of the G20 inclusive framework for taxation. Further, delegates exchanged views on ways for advancing financial inclusion and productivity gains through innovative digital approaches,including digital technologies and digital public infrastructure, to achieve Sustainable Development Goals in G20 countries and beyond. "G20 delegates were invited to discuss progress on the Financial Sector and provide guidance on #CryptoAssets ecosystem, including their regulation, supervision, and oversight," the ministry tweeted.
In another session on financial inclusion, the G20 ministers discussed issues pertaining to the financial sector and financial inclusion under India Presidency. Ministers and governors discussed the progress under G20 Common Framework and engaged on ways for swift and timely resolution of debt treatment for countries most in need, the finance ministry said in a tweet.
Under the G20 Presidency, India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations mainly on account of the continuing geopolitical tensions and the pandemic. It is feared that if left unaddressed, the mounting debt vulnerabilities of developing nations could trigger global recession and push millions to extreme poverty.
In December last year, World Bank said the world's poorest countries owed $62 billion in annual debt service, a 35% growth over $46 billion in 2021, triggering higher risk of defaults. The low income countries are at high risk of debt distress or are already in it and debt crises are also spreading to middle income countries.
On the opening day of the ministerial conference on Monday, finance ministers of the G20 nations, which is a grouping of developed and developing countries, had discussed about the global economy and risks, issues related to crypto assets as well as policy measures for promoting green and low-carbon technologies.