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Highlights
- The G20 endorsement is a major stepping stone toward the global minimum tax by 2023
- The tax is aimed at curbing the practice of tax avoidance by choosing low-tax jurisdictions
- Climate change is another issue that has become the highlight of the ongoing G20 summit in Rome
G20 leaders, who are meeting in-person for the first time after the outbreak of the Covid pandemic, have endorsed the global minimum tax.
15% minimum levy
This paves the way ahead for a minimum 15 per cent tax on companies. It is aimed at corporations that have been using tax haven countries to avoid or evade their tax liabilities. It is expected that the global minimum tax will be in place from 2023. The US President Joe Biden took to Twitter to say that the tax is a ‘diplomacy reshaping global economy’.
Also read: Global minimum tax rate: Key things to know about the landmark deal
The G20 consists of countries from all over the world. Recently, 136 nations have agreed on the deal to impose minimum tax on companies, especially tech giants like the Amazon, Microsoft and Facebook, in a bid to prevent them from using low-tax jurisdictions to pay less or no tax on revenue.
G20 climate talks
Global warming is another big issue in the ongoing G20 summit. The members of the bloc contribute nearly 80 per cent to global greenhouse gas emissions. The world is awaiting net zero emissions by mid-21st century to limit extreme climate events like heatwaves and flooding.
Experts have said that net zero emissions by 2050 can limit the global warming to 1.5 degrees Celsius. In the July meet of G20 energy ministers, any deal on limiting emissions could not be reached. The ongoing G20 summit is expected to reach an agreement on climate goals.
Also read: Algonquin & 2 other TSX clean energy stocks to buy before November
The United Nations COP26 climate summit began in Scotland on October 31. Any deal reached by G20 leaders in Rome will shape discussions in the climate summit. Many developing countries are not ready to commit any specific target for emission reduction. These countries seek US$100 billion contribution by rich nations every year to help them achieve emissions cut goals.
