Finance ministers from the G20 club of large economies signed off on a plan for global tax reform at a summit in Venice on Saturday.
The ministers rubber-stamped a deal, agreed by some 130 nations last week, that seeks to introduce an international tax on multinational companies and sets a global minimum tax rate of 15 percent.
The reform, orchestrated by the Organization of Economic Cooperation and Development, aims to stop multinationals from shifting profits into tax havens.
“After many years of discussions and building on the progress made last year, we have achieved a historic agreement on a more stable and fairer international tax architecture,” the ministers said in a joint statement.
Final approval of the deal is not expected until the G20 leaders' meeting in Rome in October, however, with some details yet to be ironed out.
Paolo Gentiloni, the European commissioner for the economy, said the “unprecedented” tax deal was a “bold step” that had seemed unlikely a few months ago.
“This is a victory for tax fairness, for social justice and for the multilateral system. But our work is not done. We have until October to finalise this agreement. I am optimistic that we will be able in that time also to reach a consensus among all European Union Member States on this crucial issue,” Gentiloni added. Some EU countries, such as Hungary, remain opposed to the deal.
Among the unsolved questions is to what degree the global tax should replace levies like the European Commission's planned digital tax, which the EU executive hopes will help finance the bloc's post-coronavirus recovery fund. U.S. officials are pressuring the EU to drop the levy, arguing it will discriminate against American tech companies and undermine the G20 deal — something the Commission vehemently denies.
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