Deputy Prime Minister Hong: "Multinational Corporations' Excess Profit Distribution Rate 20-30%... Korea Proposes 20%"

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is seen speaking during the third session, "Policies for Economic Recovery," at the G20 Finance Ministers and Central Bank Governors Meeting held at the Arsenale Conference Hall in Venice, Italy, on the 10th (local time). The scene is being broadcast on a monitor. 2021.7.10 [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated regarding the tax allocation ratio for multinational corporations, "The Group of Seven (G7) agreed to set the allocation ratio between 20% and 30%, and the Organisation for Economic Co-operation and Development (OECD) confirmed this. We suggested starting discussions from 20%."

While visiting Venice, Italy, to attend the G20 Finance Ministers and Central Bank Governors Meeting, Deputy Prime Minister Hong held a press conference at a local hotel in the afternoon and said, "It is preferable for countries with many of the top 100 companies subject to tax allocation to have a lower allocation ratio," adding, "In our case, only one or two companies are included, but they are large in scale."

He continued, "The framework has essentially been established, but there are specific issues to resolve," and added, "Over the next three months, working-level officials will coordinate intensively to finalize everything by October." The actual implementation is expected to take place in 2023.

The OECD Inclusive Framework (IF), which includes 139 participating countries discussing the introduction of a digital tax, reached a provisional agreement at last month's general assembly. It is reported that 130 countries agreed while 9 opposed; with one additional country agreeing, the number of opposing countries has decreased to 8.

Regarding the issue of taxing intermediate goods, Deputy Prime Minister Hong said, "Taxation is applied in the final consumer goods market, but it is difficult to determine how much intermediate goods contribute in which market," and added, "A revenue attribution standard must be established during the detailed discussions by October." Concerning the introduction of a minimum tax rate in addition to tax allocation rights, he stated, as previously known, "A consensus is expected to be reached at 15%."

Meanwhile, at this G20 Finance Ministers meeting, the $650 billion International Monetary Fund (IMF) Special Drawing Rights (SDR) allocation to support low-income countries was also a major topic of discussion. Deputy Prime Minister Hong said, "We have participated before and will contribute this time as well," adding, "However, we requested that the contributions made by participating countries be recognized as foreign exchange reserve assets."

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