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World

31 Oct 2021

Rich Countries to Benefit the Most from New G-20 New Tax Deal

The Index Today

At the opening summit for the G20 in Rome, leaders of some of the world’s biggest economies showed support for a new deal on corporate taxation which aims to help protect large businesses and revenue.

The tax agreement has been divided into two parts; the first part shows the implementation of a minimum tax rate of 15% on profits and the second part focuses on reallocating tax revenues to consumers instead of business-based locations.

The new deal means developed and wealthy nations will receive the most benefits from both sides of the deal. For example, the U.S will receive additional revenues from the tax in comparison to China. More reports showed that developing nations will receive a boots of over $1.5 billion to $2 billion per year.

The G20 summit goal focuses on containing the limit of businesses to shift their taxes by allowing revenue from low-income countries to be recorded. Enhanced globalization is also a plus factor as it means businesses can shift production to other low-cost countries. President Joe Biden said, “It will eliminate incentives to shift jobs and profits abroad, and ensure that multinational corporations pay their fair share here at home. This international agreement is proof that the rest of the world agrees that corporations can and should do more to ensure that we build back better.”

All countries participating in the new tax plan must agree to a new treaty and should be able to process the hurdles. The tax plan has been undergoing development for over a decade and has faced many issues due to conflicts in areas of trade and politics. Most G20 leaders are still on different pages when it comes to energy production such as coal and oil whereas other notable issues have arisen over climate control.

The deal is expected to help boost certainty for businesses all over the globe. Matt Schruers said, “The new framework, once implemented, will allow companies to continue to invest in global markets and enable economies to recover following the pandemic.”

©Photo: Preston Jessee/WSJ

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