The finance chiefs of the Group of 20 economies agreed Friday to advance talks to sign an envisaged digital tax treaty “as soon as possible,” while underscoring the need for a fairer and progressive taxation system with the super-rich in mind.
Wrapping up two days of talks in Rio de Janeiro, the G20 economies also reiterated their commitment to ensuring stability in the foreign exchange market, on the view that excessive and disorderly fluctuations would negatively impact their financial systems at a time of a strong dollar.
Brazil, chair of the G20 this year, has placed importance on addressing inequality and proposed taxing the super-rich as part of efforts to make taxation fairer.
Japanese Finance Minister Shunichi Suzuki speaks at a press conference after a meeting of G20 finance ministers and central bank governors wrapped up in Rio de Janeiro on July 26, 2024. (Kyodo)
Many countries are currently engaged in finalizing the text of a digital tax treaty for fairer taxation. The objective is to require companies to pay a fair share of tax in countries where they do not have a physical presence but generate profits by offering services.
“It is important for all taxpayers, including ultra-high-net-worth individuals, to contribute their fair share in taxes,” the G20 said in its outcome document on international tax cooperation.
“Aggressive tax avoidance or tax evasion of ultra-high-net-worth individuals can undermine the fairness of tax systems, which comes along with a reduced effectiveness of progressive taxation,” it said.
The G20 took up a range of issues affecting the global economy, including the impact of Russia’s war in Ukraine and geopolitical risks.
Regarding the state of the global economy, the finance ministers and central bank governors took note of the increasing likelihood of a “soft landing,” adding that upside and downside risks are balanced.
“Well-calibrated” monetary policy has helped ease inflation and central banks will adjust their policies in a “data-dependent” manner, the document said.
Japanese Finance Minister Shunichi Suzuki attended the meeting, which coincided with a sharp rise of the yen against the dollar, with some market players betting the Bank of Japan will raise interest rates next week, a positive factor for the Japanese currency.
U.S. presidential candidate Donald Trump has recently singled out the yen and Chinese yuan in taking issue with the dollar’s strength. Market expectations that Trump, viewed as pro-business and pro-tax cuts, will return to the White House have sent share prices higher.
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