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The finance ministers of the G20 club of major economies signed a plan for global tax reform at a summit in Venice on Saturday.
Last week the ministers signed an agreement between around 130 nations that provides for the introduction of an international tax on multinational companies and a worldwide minimum tax rate of 15 percent.
The reform, orchestrated by the Organization for Economic Cooperation and Development, aims to prevent multinational corporations from shifting their profits to tax havens.
“After many years of discussion and building on the progress made over the past year, we have reached an historic agreement on a more stable and fairer international tax architecture,” the ministers said in a joint statement.
However, final approval of the deal is not expected until the G20 leaders’ meeting in Rome in October, with some details still to be clarified.
Paolo Gentiloni, EU economic commissioner, said the “unprecedented” tax deal was a “bold move” that seemed unlikely just a few months ago.
“This is a victory for tax justice, for social justice and for the multilateral system. But our work is not done. We have until October to finalize this agreement. I am optimistic that we will be able to achieve consensus among all the Member States of the European Union on this crucial issue, ”added Gentiloni. Some EU countries, such as Hungary, continue to reject the agreement.
Unresolved questions include how far the global tax will replace levies like the European Commission’s proposed digital tax that the EU executive hopes will help fund the post-coronavirus bloc recovery fund. US officials are urging the EU to drop the levy, arguing that it will discriminate against American tech companies and undermine the G20 deal – which the Commission vehemently denies.