TOKYO, Jun 7, 2019, Kyodo. The Group of 20 major economies will pledge to accelerate their efforts to more effectively collect taxes from multinational digital companies like Google LLC and Facebook Inc., a draft of a joint statement by their finance chiefs showed Thursday, repored the Kyodo.
The G-20 finance ministers and central bank governors will also warn that the world economy continues to face downside risks from trade conflicts between leading economies, while calling for accommodative monetary policy to ensure the economy is recovering.
“We will continue our cooperation for a globally fair, sustainable, and modern international tax system, and welcome international cooperation to advance pro-growth tax policies,” according to the draft communique obtained by Kyodo News ahead of a G-20 meeting on Saturday and Sunday in the Japanese city of Fukuoka.
The meeting, which precedes the G-20 summit on June 28 to 29 in Osaka, will take place amid claims that digital giants, also including Apple Inc. and Amazon.com Inc., are not paying their fair share of taxes.
The finance chiefs will discuss how to create global tax rules covering those companies, based more on where they make their sales rather than where their permanent offices are located.
“We welcome the recent progress on addressing the tax challenges arising from digitalization and endorse the ambitious work program,” said the draft statement, in reference to recent proposals by the Organization for Economic Cooperation and Development on taxation rules in the digital era.
“We will redouble our efforts for a consensus-based solution with a final report by 2020,” it said.
As for the world economy, the G-20 will say, “Global growth appears to be stabilizing, and is generally projected to pick up moderately later this year and into 2020, while risks remain tilted to the downside.”
“This recovery,” the draft continued, “hinges on accommodative financial conditions continuing, the impact of trade tensions not materially affecting the global economy further,” among other factors. “We will continue to monitor risks, take action to mitigate them and respond if they materialize.”
“Fiscal policy should rebuild buffers where needed” while “monetary policy should ensure that inflation remains on track toward, or stabilizes around targets,” it said, adding, “Central bank decisions need to remain well communicated.”
The G-20 economies will reiterate their commitment to refrain from competitive currency devaluations aimed at gaining an unfair trade advantage, according to the draft, which was presented during a meeting of deputy finance chiefs that began Thursday.
The G-20 will also keep their pledge to address global current account imbalances amid growing concern about trade battles between the United States and its partners, including China, Japan and the European Union.
While President Donald Trump remains focused on reducing U.S. goods trade deficits, the G-20 will stress the need for “monitoring all components of the current account, including service trade and income imbalances,” said the draft.
Among other issues to be discussed during the two-day meeting are problems with financing in infrastructure projects in developing countries.
The G-20 will express concern “about the debt vulnerabilities and a lack of debt transparency in many low-income countries,” the draft said, apparently referring to some nations struggling to manage debt for Chinese-built railway and other infrastructure under Beijing’s “One Belt, One Road” initiative.
The finance chiefs will also step up efforts against money laundering and funding of terrorist groups through the use of virtual assets. They are expected to agree to enhance regulations on cryptocurrency exchange operators, including requiring them to be registered with governments.
The G-20 comprises Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
The following is the gist of a draft joint statement obtained by Kyodo News on Thursday ahead of the meeting of Group of 20 finance ministers and central bank governors over the weekend in Fukuoka, Japan.
— will step up efforts toward new taxation rules on multinational digital companies and draw up a final report by 2020.
— expects the world economy to grow moderately later this year and into 2020.
— will monitor downside risks including global trade tensions and respond if they materialize.
— need to monitor all components of the current account to address global imbalances and mitigate risks to growth.
— will seek the transparency of debt management for infrastructure projects in developing countries.
— will step up efforts against money laundering and funding of terrorist groups through the use of virtual assets.