G20 delegates held “substantive discussions” on international taxation during the course of a finance track meeting in Bengaluru and monitored the progress of a two-pillar tax package being developed under the OECD/G20 inclusive framework.
Under the proposed framework, multinational enterprises will be subject to a minimum 15% tax rate from 2023. This is aimed at helping governments address the challenges of taxing tech firms, among others, in a globalised world.
Addressing media after the first G20 Finance and Central Bank Deputies Meeting on Wednesday, economic affairs secretary Ajay Seth said the meeting saw broad support for India’s proposed priorities for the G20 Finance Track agenda for 2023. A broad range of issues-such as global financial stability, common approach towards regulating crypto assets, strengthening multilateral development banks, boosting financial inclusion and pandemic response framework — were deliberated on.
The meeting was co-chaired by Seth and Reserve Bank of India (RBI) deputy governor Michael Patra. The broader impact of the Central Bank Digital Currency (CBDC) and its use cases will be deliberated on in a priority in the coming days, the secretary said.
The RBI has launched pilots of CBDC in both wholesale and retail segments. The pilot in wholesale segment, known as the Digital Rupee – Wholesale (e-W), was launched on November 1, 2022, with use case being limited to the settlement of secondary market transactions in government securities.
The pilot in the retail segment, known as digital Rupee-Retail (e-R), was launched on December 1, within a closed user group comprising participating customers and merchants. Seth said delegates held deliberations on crypto assets and their impact on macro-economic situations.
“A lot of views on crypto assets were expressed. Different countries have taken different approaches… Discussions are on how to build consensus for better understanding and better regulation around this asset,” Seth added.
The G20 discussion was divided into seven sessions. These included deliberations on sustainable finance, multilateral development banks, global public goods, international taxation, and crypto assets. The cost of cross-border remittances and its tax implications also featured in discussions, according to chief economic advisor V Anantha Nageswaran. “Capacity building within the financial system for enabling SME financing is something we spoke about,” he added.
In a session on International Financial Architecture, delegates spoke about bolstering multilateral development banks. They also discussed on tasks that would be undertaken in 2023 on key issues, including global debt distress and capital flows.In a session on global health, the G20 deputies deliberated on bolstering coordination between finance and health ministries of various nations for swift response to pandemic prevention.
In a separate session, the delegates also focused on financial sector developments and ways to boost financial inclusion through a people-centric vision. They also discussed appropriate financial regulations to ensure financial stability through a common approach amid global turmoil. These discussions will shape the First G20 Finance Ministers and Central Bank Governors Meeting, which will be held in Bengaluru from February 23 to 25, he added.