“We did it,” announced Finance Minister Scholz at the meeting of the G20 finance ministers in Venice. After a long struggle, there is an agreement on a global minimum tax for large corporations.
The big industrial and trading countries have approved the global tax reform for big companies. “We worked really hard in the past few weeks, but we made it,” said Federal Finance Minister Olaf Scholz on the sidelines of a meeting of G20 finance ministers in Venice. The final declaration speaks of a “historical reform”.
G20 summit: Finance ministers agree on minimum global tax
The planned minimum tax of 15 percent and the new distribution of taxation rights among the states should be implemented as soon as possible. “Our goal is for the agreement to come into force in 2023,” said Scholz. The final questions should be clarified by October of this year when the heads of state of the G20 countries should agree. He is “completely sure” that a decision will be made there.
Scholz spoke of a “great historical moment”. The G20 states agreed in Venice that they wanted to agree on a new order of international taxation, “he said. At the end of the ministerial debate, applause broke out.
Pay where business is good
131 countries had recently approved the plans under the umbrella of the organization of the industrial nation OECD. Eight countries – including Ireland, Hungary, and Estonia from Europe – refused to sign.
The minimum tax of 15 percent is intended to prevent companies from relocating their headquarters to low-tax countries and to prevent the states from lowering their company taxes in competition with one another.
In addition, international companies should not only pay taxes in their home countries in the future but also where they do good business. This affects, among other things, large digital corporations, which so far often pay little taxes overall, but of course also, for example, German car companies that sell a lot of vehicles in China. In addition, emerging countries should receive more tax revenue.
Yellen: “It is not essential that all countries are on board”
The planned OECD tax reform is good for all countries, said US Treasury Secretary Janet Yellen. This will generate more income and end the race to ever-lower tax rates. You will continue to campaign for other countries to join the agreement. “We will try, but I should stress that it is not essential that all countries are on board.”
Scholz recently also said that if German corporations abroad, for example, only pay two percent tax on their profits there, the difference to the new minimum tax in Germany will in the future be levied.
Reminder from the BDI
The industry association BDI warned that the minimum tax rate must be based on the 15 percent brought into play by the USA. Several countries, including France and Germany, had previously indicated that they actually wanted a higher minimum rate. The BDI also warned that the G20 countries should now speak out clearly against additional national and European digital taxes that could lead to competitive disadvantages and trade conflicts.
