WASHINGTON: Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said on Tuesday that she’s optimistic for a global agreement on corporate income taxation this year to fix the international tax system.
“Now, we face the two disastrous and very expensive crises of COVID and climate change. These urgent needs, combined with a renewed spirit of multilateralism, give us a unique opportunity to rethink and fix the international tax system,” Georgieva said in remarks prepared for a virtual book launch.
Georgieva said the IMF “fully supports” the Inclusive Framework on Base Erosion and Profit Shifting at the Organization for Economic Cooperation and Development (OECD), which involves 139 economies, as a way to reform international taxation.
“This type of multilateral approach is the only way to ensure that highly profitable multinational firms both pay sufficient tax and pay it to countries where they have significant engagement, including in low-income developing countries,” she said.
“We are particularly optimistic for a global agreement on corporate income taxation in 2021,” Georgieva continued. “And it is urgently needed to avoid, down the road, the risk of spiraling into a chaotic tax or trade war where everyone loses.”
Georgieva’s remarks came after U.S. Treasury Secretary Janet Yellen last month called for working with G20 economies to agree to a global minimum corporate tax rate that would provide a more level playing field for all countries.
“It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government,” Yellen said.