G20 finance ministers back overhaul of corporate tax for multinationals

The pact to establish a minimum global corporate tax rate of at least 15% is an attempt to squeeze more money out of tech giants like Google.

Finance chiefs of the G20 club of large economies have backed a landmark move to stop multinationals shifting profits into low-tax havens and win back hundreds of billions in lost revenues, a draft communique showed.

The agreement at talks in Venice is set to be finalised this weekend and caps eight years of wrangling over the issue.

The aim is for country leaders to give it a final blessing at an October summit in Rome.

The pact to establish a minimum global corporate tax rate of at least 15% is an attempt to squeeze more money out of tech giants like Amazon and Google as well as other multinationals able to shop around for the most attractive tax base. 

However, moves towards agreement have in recent weeks been hampered by a handful of countries, including Ireland.   

While tax campaigners point to loopholes in the proposals and wanted a more ambitious crackdown, the move is a rare case of cross-border coordination in tax matters and could strip many tax havens of their appeal. 

"We invite all members that have not yet joined the international agreement to do so," the communique seen by Reuters said of a number of countries still resisting the move.

That would represent political endorsement of an agreement this month among 131 countries at talks hosted by the Paris-based Organisation for Economic Cooperation and Development. 

Momentum for a deal accelerated this year with the strong backing of the Biden administration in the US and many public treasuries around the world stretched by the massive fiscal support needed to shield pandemic-ravaged economies.

Geoffrey Okamoto at the IMF called it a "net win for the world" but said work was still needed to simplify the agreement for countries. 

If all goes to plan, the new tax rules should be translated into binding legislation worldwide before the end of 2023.

However, a fight in the US Congress over president Joe Biden's proposed tax increases on corporations and wealthy Americans could yet create hurdles.

Equally, there could be difficulties because EU member states Ireland, Estonia, and Hungary are among the countries that have not yet signed up. 

"I am convinced that in the end we will come to a joint decision in the EU," German finance minister Olaf Scholz said.