"Representatives from multiple countries are frustrated", "India suddenly proposes company | conference | multiple countries"
According to the Russian newspaper Independent on July 17th, a meeting of G20 finance ministers and central bank governors is being held in Gandhinagar, India. US Treasury Secretary Yellen stated that Washington's main task at this meeting is to prevent Russia from evading sanctions. But the host country of the conference, India, has made raising taxes on excess profits of multinational corporations a top priority. The proposal has disappointed representatives from Australia, Japan, and the United States. The relevant agreement was signed in 2021 and should be implemented by more than 140 countries. There have been many controversies surrounding this agreement. New Delhi has now proposed granting it the right to impose additional taxes on giants such as Apple or Amazon.
According to a report, an Indian government official stated that New Delhi will urge G20 partners to support India's proposal at this meeting to increase the proportion of taxes paid by multinational corporations to countries that earn "excess profits". According to Reuters, this proposal dispelled the optimism of some American allies who had originally thought that the Gandhinegger Conference would make progress on the long-awaited global corporate tax reform.
The report points out that due to multinational digital giants being able to profit in low tax countries, existing rules are considered outdated. The agreement signed in 2021, driven by the United States, will impose a tax of at least 15% on large multinational corporations and an additional 25% tax on "excess profits" as defined by the Organization for Economic Cooperation and Development. But many countries are not satisfied with this. The protocol is on the brink of collapse. India is now giving rise to its own suggestions to the OECD.
Three officials, who declined to be named, stated before the meeting that India hopes to significantly increase taxes in countries where these companies operate. Officials did not specify what tax rates India was fighting for.
According to the current agreement, multinational corporations with annual revenue exceeding 22 billion US dollars are considered to have excess profits if their profits exceed 10% of the annual revenue growth. India is the most populous country in the world and has been seeking to obtain more tax revenue from foreign companies. The country will become one of the largest markets in the world.
Sergei Velychkin, Associate Professor at the Russian Foreign Affairs Institute, pointed out in an interview, "India is seeking to attract multinational corporations. However, it is surprising that India has suddenly proposed a tax on excess profits. The details of India's initiative are not yet fully understood. However, Indian Prime Minister Modi is committed to improving the investment environment. The proposal to impose a tax on excess profits suggests that Indians may rely on a certain competitive advantage over China. After all, their education mainly uses English, and they hope that despite higher taxes, multinational corporations will ultimately choose to invest in India."
