G20 finance ministers set to back global floor on corporate taxes

The deal is an attempt to squeeze more money out of multinationals that shop around for tax bases

European Central Bank President Christine Lagarde arrives for the G20 finance ministers and central bankers meeting in Venice, Italy.

Italian Navy personnel patrol the waters of Venice amid heightened security for the G20 gathering.

US Federal Reserve Board chairman Jerome Powell, centre, arrives in Venice

Haruhiko Kuroda, governor of Bank of Japan, adjusts his glasses as he arrives for the meeting.

An Italian Navy diver and support team patrol the waters by the Arsenal complex of former shipyards and armories, where the G20 meeting is taking place.

US Treasury Secretary Janet Yellen is greeted after arriving in Venice.

Canada's Minister of Finance and Deputy Prime Minister Chrystia Freeland steps off a boat.

French Economy and Finance Minister Bruno Le Maire arrives in Venice.

G20 finance chiefs are backing a landmark move to stop multinational companies moving profits into low-tax havens, a draft communique has shown.

The deal could mean hundreds of billions of dollars more in tax being paid to national governments.

The UK Chancellor of the Exchequer, Rishi Sunak, led calls at the Venice summit of G20 finance ministers to push ahead with the historic tax deal.

The agreement, set to be finalised on Saturday, will end eight years of wrangling over the issue.

Reuters reported that the communique reads: “We invite all members that have not yet joined the international agreement to do so.”

Geoffrey Okamoto, first deputy managing director of the International Monetary Fund, called it a “net win for the world” but said more work was needed to help some countries adopt it.

“It has to be simple enough for the vast majority of the world to actually implement and administer it,” he said.

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

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

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

However, there could be a fight in the US where many of the multinationals were founded by people who now among the world’s richest, and there could be difficulties in the EU where Ireland, Estonia and Hungary 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.

The meeting of G20 finance ministers and central bankers in Venice is their first face-to-face encounter since the start of the Covid-19 pandemic.

The aim is for national leaders to give the agreement a final blessing at an October summit in Rome.