Hong Nam-ki, Deputy Prime Minister, Attends G20 Finance Ministers' Meeting: "Digital Tax, Support Needed for Corporate Adaptation"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking at the third session, "Policies for Economic Recovery," during the G20 Finance Ministers and Central Bank Governors Meeting held on July 10 (local time) at the Arsenale Conference Hall in Venice, Italy.

[Sejong=Asia Economy Reporter Kim Hyunjung] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki emphasized the need to support companies' adaptation during the introduction of the digital tax at the G20 Finance Ministers' Meeting.

Deputy Prime Minister Hong made these remarks at the 3rd G20 Finance Ministers and Central Bank Governors Meeting of 2021 held on October 9-10 (local time) in Venice, Italy. This meeting was held in person for the first time in 1 year and 5 months since the Riyadh meeting in Saudi Arabia in February last year, with 70-80% of member countries' finance ministers and central bank governors attending in person, excluding some emerging countries, along with representatives from international organizations such as the International Monetary Fund (IMF), World Bank (WB), and Organisation for Economic Co-operation and Development (OECD).

At the session on international taxation (Session 5), Deputy Prime Minister Hong stated regarding the digital tax, on which member countries are currently reaching an agreement, "The significance of this digital tax agreement lies in achieving global tax justice and enhancing mutual benefits among countries." He added, "Since detailed discussions are scheduled until October, it is necessary to carefully consider the opinions of governments, the business community, and stakeholders to establish reasonable detailed measures." He further stressed, "Each government must minimize confusion and burdens on companies due to changes in the tax environment and support companies' adaptation."

An official from the Ministry of Economy and Finance explained, "In the ongoing discussions on the digital tax, which will continue until October, practical discussions will be held from the perspective of national interests to design specific details on key issues such as allocation rates and minimum tax rates."

Additionally, Deputy Prime Minister Hong made suggestions on consolidating economic recovery and measures for global economic structural transformation through remarks in sessions on the global economy and health (Session 1), international financial system (Session 2), and policies for economic recovery (Session 3).

Regarding the global economy and health, member countries agreed that while the global economy is recovering, there are risk factors such as uneven recovery and health crises. They reached a consensus on the need to continue expansionary macroeconomic policies and strengthen equitable vaccine access. They also welcomed the review results of the High-Level Independent Panel (HLIP) for improving the global health system and urged follow-up actions.

Deputy Prime Minister Hong stated, "Prevention is economy," highlighting the timeliness of the HLIP review for improving the global health system. He emphasized three linkages to respond to increasing pandemic risks, the realization of climate risks, and the acceleration of the digital economy facing the global economy.

He explained, "Linkages between advanced and developing countries, between economic and social approaches, and between government and private sectors are necessary," adding, "The issues at hand are a mix of social and economic problems, requiring an institutional framework to internalize related costs within the economic system. Responses to pandemics, climate change, and digital transformation also require joint efforts by the private sector and government."

Regarding the international financial system, member countries agreed on the need to finalize the general allocation of IMF Special Drawing Rights (SDR) and the utilization of SDR voluntarily contributed by member countries. Furthermore, many member countries mentioned the necessity of transparent disclosure of debt information to ensure the sustainability of low-income countries' debt.

As a co-chair country of the International Financial System Working Group, Deputy Prime Minister Hong proposed three tasks for a stable and resilient international financial system: ▲ creating best practices to finalize ongoing debt restructuring and continuing discussions on low-income countries' participation and debt information disclosure ▲ preparing utilization plans for SDRs contributed by advanced countries ▲ expanding recognition of flexible policy responses to mitigate capital flow volatility and ensuring consistency among international organizations.

Regarding policies for economic recovery, member countries agreed on the need for digital and green economic transitions to improve resilience, while also mentioning the necessity of implementing carbon pricing related to the green economy and considering country-specific conditions.

Deputy Prime Minister Hong emphasized the importance of investment in green and digital infrastructure for the transition to a green and digital economy during his remarks. He stressed the importance of a comprehensive perspective on climate response, including consistency with existing systems, and impacts on growth, employment, and distribution. He also noted that the pace of climate response is as important as its direction, cautioning against it being too slow or too fast. He highlighted the need for harmony with micro policies (such as structural reforms) to maximize macro policy effectiveness and the necessity of an orderly exit strategy (macro policy).

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