Korean and French Ministers Expect Approval of Key Digital Tax Provisions at G20 Meeting

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance. (Photo by Ministry of Strategy and Finance)

[Sejong=Asia Economy Reporter Moon Chaeseok] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, and Bruno Le Maire, French Minister of Finance, shared the view that "they hope key contents regarding the digital tax (Pillar 1) and the global minimum tax (Pillar 2) can be endorsed at the G20 Finance Ministers' Meeting," the Ministry of Economy and Finance announced on the 2nd.

Recently, countries have been agreeing to apply two major principles: requiring global companies to pay a minimum 15% corporate tax and granting taxing rights to the location where corporate income is generated (Pillar 1), and if a certain country applies an effective tax rate lower than the global minimum corporate tax rate, granting additional taxing rights to other countries (Pillar 2).

Deputy Prime Minister Hong said this during a video meeting with Minister Le Maire at the Government Complex Seoul at 6:30 p.m. the previous day. The meeting was held to discuss key agenda items such as the digital tax ahead of the G20 Finance Ministers' Meeting scheduled for the 9th and 10th.

Regarding Pillar 1 and Pillar 2, 130 countries agreed on a final plan the day before to prevent "Base Erosion and Profit Shifting (BEPS)" through cross-border income shifting. The Organisation for Economic Co-operation and Development (OECD) announced that 130 countries agreed to introduce Pillar 1 and Pillar 2 under the 'BEPS Prevention Agreement.'

Deputy Prime Minister Hong emphasized that since Korea and France are co-chair countries of the G20 International Financial Architecture Working Group (IFA WG), they must cooperate closely. The IFA WG is a working-level meeting body within the G20 that discusses measures to secure financial stability.

He also evaluated that tangible achievements were made, such as the implementation of the Debt Service Suspension Initiative (DSSI) for low-income countries and the agreement on the general allocation of $650 billion in International Monetary Fund (IMF) Special Drawing Rights (SDR). The DSSI means suspending the repayment of public debt held by G20 and Paris Club countries for low-income countries until the end of the year.

Minister Le Maire said, "The bilateral summit at last month's G7 meeting strengthened the relationship between the two countries," and added, "Let us strengthen cooperation in various fields such as the digital economy and energy going forward." Deputy Prime Minister Hong introduced Korea's New Deal initiatives, including the Digital New Deal and Green New Deal, and responded, "I hope an opportunity will be created for close discussions between the two finance authorities."

This content was produced with the assistance of AI translation services.