IMF in favour of global minimum corporate tax

[WASHINGTON] The IMF's top economist on Tuesday said the fund has long supported a global minimum corporate tax, after US Treasury Secretary Janet Yellen called on G20 countries to adopt one.

"We are very much in favour of a global minimum corporate tax," International Monetary Fund chief economist Gita Gopinath told reporters. "It is a big concern of ours."

Speaking at the start of the spring meetings of the IMF and World Bank, Gopinath warned of a "large amount" of tax avoidance and also "countries sending money to tax havens." "That's reducing the tax base on which governments can collect revenues and do the necessary social and economic spending that's required." She said government spending will still be needed to ensure countries recover from the damage inflicted by the Covid-19 pandemic.

Finance ministers from the Group of 20 advanced nations are due to meet on Wednesday, and Ms Yellen on Monday said she is working with the group to reach an agreement to end what she called the "race to the bottom" on taxation.

President Joe Biden announced plans to increase corporate taxes to finance a massive US$2 trillion infrastructure and jobs programme, paid for by hiking the US corporate tax rate to 28 per cent and the minimum rate for multinationals to 21 per cent.

Mr Biden expressed outrage at multinationals like e-commerce giant Amazon that have moved to tax havens or used loopholes to pay little to no tax, and said he would put a stop to the practice.

AFP