G20 finance mins take up plan to deter cross-border tax dodging

Washington: Finance ministers from the Group of 20 countries will push for agreement on proposals backed by US President Joe Biden to deter tax dodging by MNCs.

While approval of the sweeping tax package is likely at the G-20 meeting Friday and Saturday in Venice, the proposals still face a key hurdle in the US Congress, where Republicans have vowed to oppose it.

Biden's proposal for a 15 per cent global corporate minimum tax resulted in a breakthrough in stalled international tax talks. An agreement was reached July 1 among 131 countries in negotiations convened by the Paris-based Organization for Economic Cooperation and Development (OECD).

The deal aims to discourage the use of often-complex accounting schemes to move profits to where the least tax is due.

The OECD deal asks countries where companies are headquartered to enact the minimum tax so that their companies would pay tax at home even if they shift profits to subsidiaries in low-rate countries overseas, so-called tax havens.

Countries have lowered their tax rates to attract the revenue, moves described by US Treasury Secretary Janet Yellen as a global race to the bottom that the proposal could stop.