G20 leaders have officially endorsed the global deal for a corporate tax of at least 15%, US Treasury Secretary Janet Yellen said, hailing it as a “historic” step.
“Today, each G20 head of state approved a landmark agreement on new international tax rules, including a global minimum tax that will end the damaging race to the bottom in corporate taxation,” he said. she declared.
Some 136 countries representing more than 90% of global GDP have signed an agreement negotiated by the OECD to tax multinational corporations more equitably and enact a minimum global corporate tax of 15%.
Ireland has been one of the resistant to the increase, but earlier this month Cabinet approved the decision to increase the corporate tax rate from 12.5% to 15%.
The mini-revolution, first hinted at in 2017 and bolstered by backing from US President Joe Biden, is expected to take effect in 2023 – but the deadline could slip, in part due to resistance from US politicians.
The first pillar of the reform, which is to tax companies where they make their profits, and not just where they are headquartered, met with stiff opposition in the US Congress.
US internet giants such as Google, Amazon, Facebook and Apple – experts at relocating to low-tax countries to minimize their tax bills – are particular targets of the new global regulations.
Meanwhile, leaders of the world’s 20 largest economies are poised to recognize the existential threat of climate change, but stop before sweeping new commitments to tame global warming.
A draft statement seen by Reuters shows that major countries are likely to only slightly step up their previous climate action commitments, while failing to set tough new targets that activists say are key to averting an environmental catastrophe.
Leaders are also expected to support plans to vaccinate 70% of the world’s population against Covid-19 by mid-2022 and create a task force to tackle future pandemics.
“From the pandemic to climate change, to fair and equitable taxation, going it alone is just not an option,” Italian Prime Minister Mario Draghi said at the start of the meeting, which was held at a health center. conference in glass and steel, known as “The Cloud”.
The G20 bloc, which includes Brazil, China, India, Germany and the United States, accounts for over 80% of the world’s gross domestic product, 60% of its population and around 80% of global emissions from greenhouse gas.
Many G20 leaders, including US President Joe Biden, will travel directly to Glasgow for the start on Monday of the United Nations climate summit, known as COP26, which is seen as crucial in addressing the threat of rising temperatures.
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Hopes of making major progress in Rome have been clouded by the decision of Chinese President Xi Jinping and Russian President Vladimir Putin to stay at home and follow events only by video.
British Prime Minister Boris Johnson acknowledged that the G20 and COP26 talks would be difficult, but warned that without courageous action, world civilization could collapse as quickly as the old Roman Empire, ushering in a new dark age .
“It’s going to be very, very difficult to get the deal we need,” he told reporters this morning.
The draft final communiqué says G20 countries will step up efforts to limit global warming to 1.5 ° C – the level scientists say is necessary to avoid disastrous new climate models.
The document also recognizes that current national plans on how to reduce harmful emissions will need to be strengthened, but offers little detail on how this should be done.
In addition, the leaders pledged to stop funding for overseas coal-fired power generation by the end of this year and to “do everything possible” to stop the construction of new coal-fired power plants before. the late 2030s.
As the climate debate will dominate in Rome, much of the first day of talks was devoted to discussing the Covid-19 health crisis and economic recovery.
Fears over rising energy prices and stretched supply chains will be addressed, while Biden is expected to urge G20 energy producers with slack capacity to increase production, including Russia and the United States. Saudi Arabia, to ensure a stronger global economic recovery, a senior US administration official said. .
The US president was later due to speak with leaders of Britain, Germany and France on Iran’s nuclear ambitions – one of many sidelines as G20 leaders catch up on in-person diplomacy.
“It’s great to see you all here after a few difficult years for the global community,” said Mr. Draghi.
Rome has been placed on high security alert since the weekend, with up to 6,000 police and around 500 troops deployed to maintain order.
Two protest rallies were authorized during the day, but protesters will be kept away from the center of the summit.