G20 ministers weigh impact of coronavirus on economy

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Saudi Arabian Monetary Authority (SAMA) Governor Ahmed Al-Kholifey addresses the G20 meeting in Riyadh, Saturday. — Courtesy photo

Saudi Gazette report

RIYADH —
Finance ministers and central bank governors from G20 nations weighed the potential impact of coronavirus epidemic on the world economy as they met in Riyadh Saturday for a two-day gathering.

At the meeting in Saudi Arabia, the first Arab nation to hold the G20 presidency, financial leaders from world's top 20 economies are also seeking consensus on ways to achieve a global taxation system for the digital era.

Muhamad Bin Abdullah Al-Jadaan, Saudi Minister of Finance, welcomed the participants, affirming that the Kingdom was proud to host the G20 summit and looks forward to work with the G20 partners to find solutions for upcoming challenges.

"Today's event gives us an opportunity to evaluate the transparency we have achieved and discuss ways of achieving steady success. It will also provide an opportunity to discuss finding solutions to tax problems resulting from the digitization of the economy," Al-Jadaan said.

"With the support of the G20 countries, the international community has achieved great successes in combating tax evasion and the transfer of profits. Today, the members of the Economic Cooperation Organization (ECO) of the G20 and the Global Forum on Transparency and Exchange of Information for Tax Purposes work together to implement internationally agreed standards of tax transparency," he said, pointing out that these standards represent the need to access to information for tax purposes and the need to protect the privacy of taxpayers.

Al-Jadaan disclosed that more than 6,000 bilateral cooperation agreements are signed, adding that these agreements are represented by tax authorities around the world working on taking advantage of the automatic exchange of information mechanisms, where information was exchanged about 50 million fiscal accounts by the end of 2019 at a value of more than five billion euros. He added that nearly 100 billion euros were identified from additional tax revenue due to voluntary compliance mechanisms and investigations.

Al-Jadaan asserted that the symposium will also discuss developments in exchange of information for tax purposes and how tax transparency standards can evolve.

The minister stressed that everyone understands that digitization has a profound impact on the global economy and the way in which to conduct business, adding that the companies are now able to form great economic ties with countries, without a physical presence, and therefore, without a tax presence. He affirmed that these developments have made it necessary to modernize and reform the international tax system.

The gathering comes amid growing alarm over the new coronavirus as Chinese authorities lock down millions of people to prevent the spread of the disease, with major knock-on effects for the global economy.

The virus has now claimed 2,345 lives in China, cutting off transportation and forcing businesses to close their doors.

The impact of the epidemic could see a "V-shaped" trajectory, with a sharp decline in China's GDP followed by a sharp recovery, but the situation could have more dire consequences for other countries as the impacts spill over, said IMF chief Kristalina Georgieva.

At the core of discussions at the gathering is an action plan to shield the world economy — already facing a slowdown — from the impact of the outbreak, said French Finance Minister Bruno Le Maire.

"The question remains open: whether it will be a V-shape with a quick recovery of the world economy or whether it would lead to an L-shape with a persistent slowdown in world growth," Le Maire told reporters.

"This is the key question."

China has said it will not be sending any leaders from Beijing for the Riyadh gathering.

But it said the Chinese ambassador in the Kingdom will instead lead a small delegation.

The G20 organizers also hosted a ministerial-level symposium on international taxation on Saturday, focusing on the challenges arising from the digitalization of the global economy.

"There is a consensus among the G20 members on the necessity of getting this new international taxation system for the sake of fairness and efficiency," said Le Maire.

He added there was also consensus on a global framework for an international system while urging the gathered leaders to reach a compromise solution by the end of the year.

Last month, Britain said its planned digital tax on hugely profitable technology giants will proceed from April despite US threats of retaliatory tariffs.

"You cannot have in a global economy different national tax systems that conflict with each other," US Treasury Secretary Steven Mnuchin told the Riyadh gathering.

Other European nations like Italy and Austria have already introduced their own digital levy, but France has put its plans on hold. — With inputs from Agencies


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