Global corporate tax plan gains momentum as nations seek post-pandemic windfall, but will poor countries lose out?

US President Joe Biden’s administration has proposed a 21 per cent minimum global corporate tax, but headwinds could make a midyear target for the plan difficult to achieve

World Bank chief expresses concerns that the ‘high’ minimum tax rate proposed for businesses would impede ability of developing nations to attract investment

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US President Joe Biden’s administration has proposed a 21 per cent minimum global corporate tax – much higher than the 12.5 per cent discussed in recent years by the Paris-based Organisation for Economic Cooperation and Development. Photo: AFP

Published: 12:30am, 10 Apr 2021Updated: 3:10am, 10 Apr 2021

Economic crises often spur breakthroughs, and this may again prove to be the case as a long-delayed plan to overhaul global corporate taxes gains momentum.

Group of 20 (G20) finance ministers and central bank governors added impetus to the plan on Wednesday, stating that they are committed to reaching a deal on a global minimum corporate tax by midyear.

Further progress came on Thursday when the Financial Times reported the United States calling for multinational companies to pay taxes based on sales in each country, regardless of whether they have a physical presence there – including US tech companies – a concession demanded by some nations.

With the US throwing its weight behind the plan this week, while Germany and France signalled their support, prospects for a deal look better than at any time in recent history.

A distinct feature of India at the G20 since Prime Minister Narendra Modi came to power has been to fight terror financing and tax havens, says Akshay Mathur, head of the Geoeconomics Studies Programme at the New Delhi-based Observer Research Foundation. Photo: TNS

The US needs funds for its US$2.3 trillion infrastructure plan, while governments globally must pay about US$16 trillion that the International Monetary Fund estimates they have committed to fighting the coronavirus pandemic.

Kevin Hamlin

Kevin Hamlin is a freelance journalist based in Britain who has almost 40 years of experience covering economics and finance in Asia. Before moving to the Britain in 2020, he covered China’s economy for Bloomberg from Beijing for 12 years. Prior to that, he ran Institutional Investor magazine’s Asia coverage from Hong Kong for almost a decade. He has also written for Britain’s Independent and Financial Times newspapers.

Finbarr Bermingham

Finbarr Bermingham reports on Europe-China relations for the Post. He joined the newspaper in 2018, initially on the Political Economy desk reporting primarily on global trade, economics and geopolitics. After a decade on the trade beat in London and Hong Kong, he took up the role of Europe Correspondent, moving to Brussels to report from the heart of the EU. Having helmed the US-China Trade War Update, a weekly podcast, since 2019, he is the current host of the China Geopolitics Podcast.

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