FTC high-level event: Global South perspective on G20 agreement
July 20th, 2021
July 20th, 2021
The FTC organised on July 16 a high-level event on the G20 minimum corporate tax proposal in partnership with ICRICT, TJNA, APMDD and Fundación SES.
The panel discussion, which can be viewed in its entirety here, analysed how the G20 communique was received in Africa, Latin America and Asia, and agreed that developing countries have very little to gain from this historical agreement. It concluded that the 15 percent global minimum tax rate proposed risks promoting a race to the bottom and fails to address key issues of tax evasion and fiscal transparency.
Here are some of the highlights from the panelists, including key quotes and discussions during their presentations:
“There are serious concerns that the Global North is being pitted against the Global South. African civil society organisations have already called to reject the deal while Argentina’s finance minister has called for a much higher rate, at least 21 percent. Meanwhile the African Tax Administration Forum have seen that their proposals were ignored even though they were adopted by the African Union.”
“The G20 deal is being called historical because it’s the first time there’s an agreement on international taxation, this is great progress but it’s not enough. The 15 percent could be seen as reasonable but US president Biden’s proposal of 21 percent is much more reasonable, closer to the 25 percent we defend. The 15 percent is more of a concession and generates a possibility of a global tax haven. If all countries apply 15 percent it would be a complete deterioration and would become a maximum rate instead of a minimum tax.”
“This is a completely unequal deal and completely uninclusive…in as much as the OECD is called an inclusive framework, in reality it’s not…when you get down and look at the details, that where you find the devil, because most of the details show that much of what’s being discussed is disadvantageous for developing countries, for African countries.”
“For the Global South it would be better to capture hidden profits in tax havens. For us it would be more useful to eliminate bank secrecy, tax secrecy and to improve our sharing of financial information, than to discuss a global minimum tax.”
“The solution offered by the OECD and endorsed by the G20 finance leaders is a huge disappointment and rather disturbing. On Pillar 1 it sets a very narrow base and a very high threshold for tax incorporations and sets a priority to allocate tax revenues to countries where multinational corporations are headquartered. On Pillar 2 on a global minimum tax of at least 15 percent, a labour union in the Philippines said this is ridiculously low. One tax official in an Asian country said our economy cannot afford such a low rate, we will get nothing.”