UHY GLOBAL AUGUST 2021 GLOBAL NEWS GLOBAL NEWS
LANDMARK TAX FRAMEWORK Over 130 countries and jurisdictions, representing more than 90% of global GDP, have signed up to the OECD’s new framework for international tax reform. Issued in July 2021, the OECD’s 'Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy' forms part of the wider OECD/G20 Framework on Base Erosion and Profit Shifting (BEPS) and follows the agreement of a milestone accord on the taxation of multinational businesses by G7 finance ministers in June. Aimed at establishing a fairer and more efficient international tax system, the two-pillar agreement introduces taxation of multinationals in the countries where they operate, not only where they are headquartered or have a physical presence. It will also introduce a global minimum corporate tax rate. G20 finance ministers have already signed off on a minimum rate of 15% tax on corporate income for multinationals with revenue over USD 890 million. On this basis, the OECD estimates that around USD 150 billion could be raised annually in additional global tax revenues. The framework is expected to be finalised in October 2021, with the new tax system effective from 2023.
TIMELY TECH SUMMIT Over 2,000 delegates from 125 countries joined the first World Economic Forum Global Technology Governance Summit, held virtually in April 2021 and hosted by the Japanese government. In a special address, prime minister Suga Yoshihide emphasised the timeliness of discussions among global leaders on the implementation of digital technologies in the post-Covid era. Summit outcomes include the launch of new Global Smart Cities Alliance regional networks in Latin America and South Asia, a commitment to address challenges and opportunities around the rise of digital currency, the Future of the Connected World initiative to accelerate the impact of the Internet of Things (IoT) for SMEs, and the creation of a connected future roadmap to advance governance of the IoT and related technologies. The summit concluded with the message that, if harnessed properly, new technology will be key to global recovery from the Covid pandemic. “Covid-19 did not invent or create new technology,” said Vivian Balakrishnan, Singapore’s Minister for Foreign Affairs, and head of its Smart Nation Initiative. “But what it’s done is to really turbo-charge the innovation and the use of that technology."
NEW HEAD AT OECD Former Australian Finance Minister Mathias Cormann has become the new secretary-general of the Organisation for Economic Co-operation and Development (OECD). Cormann took up his post on 1 June 2021 and is expected to serve five-year term. He succeeds Mexican economist and diplomat Angel Gurri, who led the organisation for 15 years. Born in Belgium, Cormann migrated to Australia in 1996. As well as serving in the Australian government, he has represented Australia in the OECD, G20, APEC, ASEAN and the World Economic Forum. Speaking on his appointment, Cormann said the OECD’s “essential mission of the past – to promote stronger, cleaner, fairer economic growth and to raise employment and living standards – remains the critically important mission for the future.”
INTEREST RISE FOR CENTRAL BANK CRYPTO Japan and Thailand are among the latest economies to explore central bank digital currency (CBDC). The Bank of Japan began a year-long phase one proof of concept exploration of the technical feasibility of a digital yen in April 2021. The bank’s governor, Haruhiko Kuroda, explained that drivers include improving the stability and efficiency of settlement systems and meeting the potential need for a CBDC to support a digital society. Following a period of public consultation, the Bank of Thailand plans to start piloting a retail CBDC in spring 2022, with the aim of providing a digital currency for online and offline transactions and giving broader access to financial services. More than 85% of central banks are now exploring CBDC in some way. The Bahamas was the first to fully launch a nationwide CBDC in October 2020, followed by Cambodia in November 2020. China became the first major economy to begin piloting a CBDC in April 2020. It is hoped that both Chinese citizens and foreign visitors will be able to use the digital yuan at the Beijing Winter Olympics in 2022.
GREEN BOND BOOST FOR EGYPT The International Finance Corporation (IFC), the asset management arm of the World Bank, has announced its investment of USD 100 million in Egypt’s first private sector green bond. Egypt became the first nation in the Middle East and North Africa Region to issue a sovereign green bond in September 2020, through its Commercial International Bank (CIB). The offering, which was five times oversubscribed at its debut, aligns with the country’s 2030 development agenda and its commitment to the United Nations’ Sustainable Development Goals. The IFC’s investment is intended to further unlock finance for sustainable, environmentally friendly initiatives in the private sector, and to support Egypt’s transition to a greener economy. It will support a wider strategy to meet increasing demand for green buildings, renewable energy and energy-efficiency projects through private sector capital. “With this landmark transaction, we aim to encourage private sector investment in long-term climate-smart projects, paving the way for job creation, sustainable growth, and a more resilient and green recovery from the Covid-19 pandemic,” said Sergio Pimenta, IFC Vice President for the Middle East and Africa. Sina Hbous, head of sustainable development at Egypt’s Financial Regulatory Authority indicated the important role of the green bond and the promotion of sustainable finance in the Egyptian economy going forward. “This is just the beginning,” she said. “We are sure that more companies will be encouraged to consider green bonds as a viable instrument to meet their financing needs while simultaneously promoting environmental impact.”
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