The Russian invasion of Ukraine and its impact on the global economy is a persistent divisive factor in the forum of the world’s twenty leading economies.
“Many members agreed that the recovery of the global economy has slowed and is facing a major setback as a result of Russia’s war against Ukraine, which was strongly condemned (...). One member expressed the view that the sanctions are adding to existing challenges”, said the Indonesian Finance Minister, Sri Mulyani Indrawati, in a statement issued on Saturday 16 July in Bali, at the end of the third G20 Finance Summit under Indonesia’s presidency.
Unlike at the Washington meeting (see EUROPE 12936/11), Russian Finance Minister Anton Siluanov was not physically present in Bali, but connected remotely.
According to the Indonesian minister, the majority of G20 countries are seeing “alarming increase in food and energy insecurity, which is disproportionately felt by vulnerable groups” and some are concerned about “the availability of fertilisers, which may further exacerbate the food crisis”. The G20 countries therefore commit to “use all available policy tools” to address the current economic and financial challenges, including the risk of food insecurity.
On inflation, G20 central banks will continue to “appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner”, the minister noted.
Taxation. On the OECD tax agreement on minimum taxation of multinationals, the Indonesian G20 Presidency notes the commitment of G20 countries “to the swift implementation of the OECD/G20 two-pillar international tax package”.
It said ongoing work on Pillar I of the OECD agreement, which aims to tax digital giants has support and ministers called for finalising the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), including signing the Multilateral Convention “in the first half of 2023”.
On Pillar II, which aims to introduce a 15% minimum tax on multinationals, G20 members welcome the completion of the Global Anti-Base Erosion Model Rules (GloBE), which “paves the way for consistent implementation at a global level as a common approach”, according to Sri Mulyani Indrawati. And they call on the Inclusive Framework to complete the negotiations that would allow the development of the Multilateral Instrument for implementation of the Subject to Tax Rules.
At the European level, the European Commission is waiting for the OECD to finalise its work before moving forward on Pillar I (see EUROPE 12992/16). The directive implementing Pillar II is blocked in the EU Council by a Hungarian veto (see EUROPE 12974/8).
See the Indonesian Presidency’s statement: https://aeur.eu/f/2o7 (Original version in French by Mathieu Bion with Anne Damiani)