GENEVA (BLOOMBERG) – The International Monetary Fund is urging officials negotiating a global tax deal to simplify the rules so countries that currently have less sophisticated laws can comply and benefit.
A total of 132 countries and jurisdictions have this month backed a two-part agreement aimed at making multinational companies pay tax in places where they operate, known as pillar one of the deal. The second pillar of the accord is a minimum tax rate, which nations have agreed will be at least 15 per cent.
About one third of the IMF’s 190 member nations have yet to sign on to the deal, with many of them not party to the talks led by the Organisation for Economic Cooperation and Development.
A key concern for some nations is that the rules be relatively simple, the IMF’s second-ranking official said after a meeting of Group of 20 finance ministers in Venice, adding that the fund wants a system that works for all IMF members.
“There is still scope for both pillar one and pillar two to be simplified,” Geoffrey Okamoto, the IMF’s first deputy managing director, said in a phone interview from Italy on Saturday (July 11).
“There is still attention that needs to be paid for keeping this as simple as possible to get the job done, so that it’s easy and efficient to administer,” an argument that the IMF made “forcefully” at the G-20 meetings, he said.
Ministers at the G-20 discussed the divergence in recoveries across countries, with most central banks viewing inflation in some advanced economies as temporary, Okamoto said.
Developed economies probably will need to tighten monetary policy before many emerging-market and developing economies, creating potential spillover effects, he said.
The IMF will be prepared to help nations if financial conditions tighten earlier than people are expecting, Okamoto said.
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