https://sputnikglobe.com/20211101/global-minimum-tax-will-help-govts-in-raising-revenues-for-social-welfare-indian-prof-says-1090396404.html

Global Minimum Tax Will Help Govts in Raising Revenues for Social Welfare, Indian Prof Says

Global Minimum Tax Will Help Govts in Raising Revenues for Social Welfare, Indian Prof Says

Sputnik International

G-20 nations have met in Rome to discuss global economies' challenges under the new circumstance that emerged due to COVID-19. Climate change, Supply Chain... 01.11.2021, Sputnik International

2021-11-01T19:02+0000

2021-11-01T19:02+0000

2023-05-28T15:16+0000

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Leaders of the world’s 20 biggest economies, formally known as G-20, have endorsed a global minimum tax of 15% on multinational companies to avoid incurring revenues losses. US President Joe Biden termed it as more than tax deal and said "it’s diplomacy reshaping our global economy and delivering for our people."The tax rules are expected to come into force in 2023. The tax rules, formally signed by 136 countries, are expected to make it harder for multinational corporations – including giants like Google, Amazon, Facebook, or Microsoft – to avoid taxation by establishing offices in low-tax jurisdictions or tax haven countries. The G-20, or the group of twenties, is made up of 19 countries, including the US, the UK, Russia, China, Brazil, and the European Union. It accounts for over two-thirds of the global economy and 80% of greenhouse gas emissions globally. A 17 page Rome declaration was released on Sunday, detailing steps to overcome challenges like supply chain resilience and climate change. Sputnik has spoken with Prof Ashwani Mahajan, the co-convener of the Swadeshi Jagran Manch, an affiliate of Narendra Modi's BJP and premiere influential economic group on the concluded G-20 Summit in Rome.Sputnik: Global leaders endorse Minimum Global Tax on Businesses. How will it impact the Indian economy?Ashwani Mahajan: In the last two years, there has been a kind of competitive tax regime among countries to attract investments and boost their businesses. There had not been any global consensus on the minimum tax rates on corporates operating in different countries. That had started impacting the revenues of the government world over, including the US. The Trump administration had also reduced the tax rates, and that was their ideological plank to reduce the taxes in the US even then. So in India, the government had also been engaged in a competitive tax regime to save its skins because if we do not reduce taxes while others are reduced, all the investment will go to them. So, having a global consensus or at least consensus amongst the economies those which matter is a good move. I hope other countries will also follow. This step would bring an end to the competitive tax regime.There is a second issue involved in this. Multi-national companies are having their businesses world-over; they tend to avoid taxes by their book transfers, which has also impacted government revenues. With globalisation gaining ground, this source of revenues has become important for any country. New business models [used mainly by e-commerce companies] have also been developed wherein companies have been increasing their market volume and incurring losses. These companies have been incurring losses by selling products at less than the procurement price. They are saying that since they are not earning profits, they are not supposed to pay any tax, which is happening everywhere. Therefore this is the right time to redesign the tax regime so that corporates cannot fool the governments and get away without paying any tax. It would help the governments to avoid any competitive war with respect to taxation. Taxation should not be the tool or arm to attract investments. Because when you indulge in tax war, you are doing it at the cost of the welfare of the people. I think the global minimum tax will help governments in raising revenues for welfare and developmental activities.Sputnik: Will the global minimum tax put pressure on India's ability to attract investments as most foreign direct investment comes from low tax countries or tax havens?Mahajan: I don't think so. Because investments from these tax haven countries or low tax regime countries have not proved beneficial for India, we have lost a lot in tax revenues. Suppose we look at recent cases whereby the Indian government has to amend the law concerning tax claims on capital gains in the past because these tax haven countries were used as a route to avoid taxes in India. These kinds of FDI have been harming us more than anything else. The government of India has been rewriting its double taxation avoidance treaty with most of these low-income tax regime countries or tax havens to avoid these kinds of losses in revenues. India has rewritten its double taxation avoidance agreements with Mauritius and others. Ultimately, the Indian government needs resources for the development and social welfare as expectations of the people at large world over are increasing. Therefore we have to create structures whereby these corporates are not able to avoid taxes. What you see in the past, companies are becoming richer and poor people are becoming poorer. That has to come to an end.Sputnik: US President Joe Biden convened a meeting on Sunday to sort out the issues related to the global supply chain. How much is it important for India?Mahajan: During COVID, major economies have learned various lessons, and one lesson that India and the globe have learned is that it is not good to depend on one country or a set of countries for a supply chain. Indian industries are suffering because of scarcity of semiconductors. This is happening because India is dependent on China or a group of countries for intermediate goods or raw materials. It is said that the COVID has disrupted the businesses. But, these supplier countries may be playing games since India has been taking steps to become the world's manufacturing hub of the world so these countries may be intentionally trying to stop the supply of intermediaries or raw materials. Therefore, what we need are more trusted, more resilient, and more transparent global value chains. Therefore, this move to bring consensus among economies is significant for India. Because manufacturing has to shift more equally amongst the countries, economies with a competitive edge will benefit. India has a competitive advantage in terms of labour wages, brains, and various other ways. The world is changing, and new opportunities are coming up as the trust in China is declining very fast. Therefore, if you see the global mood, China is also losing ground in infrastructure development in third countries under its Belt and Road Initiatives or even in terms of investment. People are now trying to shift away from China. So, a new scenario of the global supply chain will emerge. India will have to act more positively and more proactively in this direction.Sputnik: World leaders acknowledged there would need to be "meaningful and effective actions" to mitigate temperature rises in a written agreement released Sunday but did not commit to achieving net-zero carbon emissions by a set date. What would you say about the deadlock?Mahajan: There is a change in the mindset of the governments across the world. Over the years, especially under Narendra Modi's regime, the Government of India has changed its approach altogether. India is becoming the initiators of the debate on emission reduction, and we have offered more than what we had been offering earlier at Kyoto or any other summit. Now, India has started saying that we will become an equal partner in reducing greenhouse gas emissions.So, India wants two things: one, developed countries should also reduce greenhouse gas emissions. The developed world is talking about financing the reduction in the emissions in developing countries, but they are not saying anything to reduce their domestic emissions. They are not ready to change from coal-based systems to more renewable energies. This approach is not good. Secondly, the developed world should come forward and offer $500 billion or $1000 Billion to developing countries to come out of this menace. There should be more transfer of technologies to developing or under-developed countries. Why should they be sitting on the technologies when humanities itself is vanishing? Developed countries should also finance new needs or the growing needs of the developing countries to mitigate greenhouse gas emissions. India has not only been playing a very positive role in the last few climate meetings, but it is also has its working on reducing greenhouse gas emissions. Despite losing the political capital, the Narendra Modi government is not making petrol and diesel cheaper for consumers. That is also helping India reduce the emission by a shift to more electric vehicles.

https://sputnikglobe.com/20211029/india-seeks-early-solution-to-chip-shortage-at-g-20-summit-as-crisis-reaches-unprecedented-level-1090315437.html

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