G20 says global business tax deal set to come into force next year

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Band Leigh Thomas

PARIS, February 18 (Reuters)G20 finance ministers recommitted on Friday to implement a global overhaul of cross-border corporate tax rules next year amid fears that meeting the deadline could prove difficult.

JThe Organization for Economic Co-operation and Development, which has led negotiations on the deal from the start, said it was “still on track” but would need a political compromise to get in force next year.

The deadline is widely seen as very ambitious, not least because US President Joe Biden’s administration is struggling to pass legislation that would align US law with the global agreement.

Years of negotiations culminated last October when nearly 140 countries reached an agreement on a minimum tax rate of 15% for multinationals and agreed to make it harder for companies like Google. GOOGL.OAmazon AMZN.O and Facebook FB.O to avoid tax by accounting for profits in low-tax jurisdictions.

The technical details are being fine-tuned in Paris OECD so that countries can incorporate the new rules into their law books by next year.

G20 finance ministers said in a joint statement after a meeting on Friday that they were committed to ensuring the new rules come into force globally in 2023.

“However, the task is daunting and we need your political support and leadership to ensure that progress is made in a timely manner,” OECD Secretary-General Mathias Cormann said in a report to ministers of foreign affairs. G20 finance.

“We have to rely on your ability to compromise to ensure we deliver on time,” he added.

Previous lesser tax deals have taken years to be implemented, with countries dragging their feet in updating their tax codes.

“The key issue is the implementation of our political agreement. There is no turning back, we have to move forward,” French Finance Minister Bruno Le Maire told his counterparts at the meeting.

German Finance Minister Christian Lindner said: “It is an undeniably ambitious timetable, but it is also a major and important project for international tax justice.”

The Mayor invited his G20 counterparts to come to Paris in June to sign the new multilateral legal framework needed to implement the first pillar of the agreement, which makes it harder for digital giants to park their profits in low-tax countries.

(Reporting by Leigh Thomas; Additional reporting by Zuzanna Szymanska in Berlin; Editing by Mark Heinrich, David Holmes and Toby Chopra)

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