G20 finance chiefs back global tax deal

Finance leaders from the G20 major economies have endorsed a global deal to revamp corporate taxation and pledged to sustain fiscal support for their economies while keeping a close eye on inflation.

The G20 finance ministers and central bank governors also said after a meeting in Washington on Wednesday that the International Monetary Fund should establish a new trust fund to channel a $US650 billion issuance of monetary reserves to a broader range of vulnerable countries.

The finance leaders noted in a statement that economic recovery "remains highly divergent across and within countries" and is vulnerable to new variants of COVID-19 and an uneven pace of vaccinations.

"We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while preserving financial stability and long-term fiscal sustainability, and safeguarding against downside risks and negative spillovers," the G20 finance leaders said in the statement.

Given rising inflation pressures driven by supply chain bottlenecks and shortages as economies struggle to normalise, the leaders said central banks are "monitoring current price dynamics closely".

"They will act as needed to meet their mandates, including price stability, while looking through inflation pressures where they are transitory and remaining committed to clear communication of policy stances," the G20 statement said.

Bank of Italy Governor Ignazio Visco told a news conference that G20 finance leaders still view elevated inflation in many advanced countries as caused by transitory factors that will reduce, such as supply bottlenecks, semiconductor shortages, shipping delays and weather problems.

"But these may take months before fading away, so we have to be prepared and communicating very well, how we see the issues," Visco said.

The G20 finance leaders also pledged to work to address shortages of tools to fight the COVID-19 pandemic in low- and middle-income countries in coming months, including vaccines, therapeutics and diagnostics.

The G20 finance leaders are meeting in Washington on the sidelines of the IMF and World Bank annual meetings, which come just days after 136 countries agreed to adopt a 15 per cent minimum corporate tax and partially reallocate taxing rights for large profitable multinational companies to countries where they sell products and services.

The G20 leaders endorsed the OECD tax agreement and called for swift development of so-called "model rules" to guide countries' implementation of the deal and "ensure that the new rules will come into effect at a global level in 2023".

Austrlaian Associated PressBack to Breaking News

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