At the latest G20 summit in Rome, world leaders have declared their support for the 15% global minimum corporate tax rate. This rate sets a minimum rate of corporation tax which countries worldwide must abide by.
As the summit was hosted in Rome, Italian prime minister Mario Draghi welcomed world leaders on Saturday to the summit at the Nuvola Convention Centre. It was the first in-person G20 summit that has been held since the beginning of the Covid-19 pandemic.
Mr Draghi spoke strongly in favour of the 15% corporation tax rate, arguing ‘it is clear multilateralism is the best answer to the problems we face today... In many ways it is the only possible answer. From the pandemic to climate change, to fair and equitable taxation, going it alone is simply not an option’, said Mr Draghi in his opening speech to the G20 summit.
Meanwhile, Draghi elaborated further on the global inequality of the distribution of Covid-19 vaccines by saying that the differences between high and low-income countries was ‘morally unacceptable and undermine the global recovery’.
This 15% global corporation tax rate was further endorsed by US President Joe Biden at the G20 summit. ‘Here at the G20, leaders representing 80% of the world’s GDP – allies and competitors alike – made clear their support for a strong global minimum tax. This is more than just a tax deal – it’s diplomacy reshaping our global economy and delivering for our people’
The notable countries which were opposed to these measures were Ireland, Hungary, and Estonia, in part, due to the benefits these respective countries have been able to experience from its promotion, and the usage of comparative advantage, as low corporate tax economies.
Crucially, this summit was held, just before the long-awaited COP26 conference, which is the UN’s dedicated and exclusive climate change conference. According to Euro News, UN Secretary-General, Antonio Guterres warned that the world was ‘careening towards climate catastrophe’.
He elaborated further by saying that ‘we need more ambition and more action and that will only be possible with a massive mobilisation of political will and that requires trust among the key actors. Mr Guterres added that ‘the most important objective of this G20 summit must be to re-establish trust’.
In summary, the hosting of the G20 summit was the beginning of a crucial week of international diplomacy. It accelerated to a good start, with world leaders unanimously agreeing with the imposition of a minimum global corporate tax rate.
The next crucial event is the COP26 UN climate change conference, which began on Monday. Many have dubbed this conference as the last chance to save the climate. However, arguably, this action is too little too late, and this summit will end up doing little to save a warming planet.
These events are crucial in the presidency of Biden, who seeks to deliver and certify his message that the ‘US is back’ on the world stage, after tumultuous years under the Trump presidency.