Finance ministers from Group of 20 nations agreed during meetings in Fukuoka that they need to find a common method to tax technology giants, but that won’t be easy, according to Dondo Mogajane, director general of South Africa’s national treasury.
“Remember how long ago this started? It’s not going to be easy,” he said in an interview with Bloomberg.
“The language being used is still muted, purely because the understanding, and the convergence of ideas and views — we’re not there as yet,” he said, in reference to the terms of coming to a final agreement on the framework for taxation.
Meantime, China’s central bank governor Yi Gang has kept a low profile during the meetings here, but he was spotted earlier Sunday. He is scheduled to meet with U.S Treasury Secretary Steven Mnuchin while here.
Here’s a look at other issues that have arisen over the weekend meetings:
Mnuchin tweeted his thanks to Japanese Finance Minister Taro Aso for his hospitality.
The host nation rolled out its cultural wonders to woo the officials, delegates and press gathered for talks in this ancient port city that’s located in the country’s west.
Stage performances included a calligrapher, Hakata Geisha, a Kimono show and drum performance. There’s also been traditional craft workshops on Hakata ningyo dolls and Karatsu pottery.
Here’s a look at some of the key themes that have emerged from the gathering of finance ministers and central bank chiefs:
Support from G-20 nations for a new initiative aimed at boosting transparency and disclosure around borrowing will lead to better decision making on credit risk.
That’s the view of the Institute for International Finance, which pushed for G-20 nations to agree on the new approach.
“It is our view that better disclosure will bring a range of benefits including improved credit assessment and decision-making by lenders,” the IIF said in a statement.
“Better debt management by EM borrowers (which could include better access to funding and lower borrowing costs); the promotion of debt sustainability; assistance in the fight against corruption; and the reduction in the number of incidences of market shocks,” it said.
Sunday’s meetings highlights will include the closing communique, a photo of the attending officials and ministers and a range of press briefings and interviews.
Saturday concluded with comments on the debt plan, which has the support from Japan.
“All G-20 finance ministers agree on the need for debt transparency,” German Finance Minister Olaf Scholz told reporters on the sidelines of the meetings in Fukuoka, Japan. Lender countries, including China, should be ready to accept the rules set out by the Paris Club agreement, he said.
With the world’s No. 2 economy under fire, directly and indirectly, for how its infrastructure projects have impacted lower-income host countries, Japanese officials at the helm of the G-20 presidency stressed the need for a greater transfer of information on such project financing.
Separately, Scholz noted that a US-China agreement on trade would immediately help the global growth outlook — a sentiment set to be reflected in the policy makers’ joint statement.
A draft of a communique due to be issued by the officials casts global growth as stabilizing, though with risks to the downside, including “intensified trade and geopolitical tensions,” according to the fifth draft of the statement seen by Bloomberg News.
Earlier, International Monetary Fund Managing Director Christine Lagarde shone a light on the darker side of fintech developments at the gathering.
While the huge leaps being made in financial services technology help with inclusion and modernizing markets, there are also issues with privacy, competition and market concentration, she said.
“China’s technology industry is a prime example of this trade-off between benefits and challenges,” said Lagarde.
“Over the last five years, technology growth in China has been extremely successful and allowed millions of new entrants to benefit from access to financial products and the creation of high-quality jobs. But it has also led to two firms controlling more than 90% of the mobile payments market.”
This presents “a unique systemic challenge” to financial stability and efficiency, she said.
President Donald Trump’s decision to ditch plans for tariffs on Mexico is a clear positive for the world economy, according to Indonesian Finance Minister Sri Mulyani Indrawati and Bank of Japan Governor Haruhiko Kuroda.
Indrawati said the move also signaled a broader US willingness to compromise on its trade conflict with China, describing it as “very plus plus” in an interview with Bloomberg Television in Fukuoka.
Speaking separately to reporters, Kuroda said the impact of Trump’s decision reached beyond the two countries involved and would be great for the global economy, though he cautioned that trade-related issues still loomed large on the list of uncertainties for the economic outlook.
The remarks came during a morning devoted to the challenges of raising tax from the digital economy, one of many questions on the minds of G-20 finance ministers and central bankers struggling to shore up growth amid trade tensions and a global slowdown.
France’s finance minister Bruno Le Maire said there has to be an international solution to the taxation issue and that the world now has to grapple with how to measure digital activities and the sale, exchange and use of data.
Le Maire said G-7 countries will seek a compromise on digital taxation at their next meeting in July in France, which could form the basis of a system for other G-20 countries.
Once there is a new system, France will scrap its own digital tax, which is based on turnover, taxing the exchange of data and advertising.
But reaching consensus won’t be easy.
“These are complicated issues in a changing environment and something I am sympathetic to,” said U.S. Treasury Secretary Steven Mnuchin. He agreed on the urgency of addressing the matter but not all the ideas being suggested by his counterparts.
Earlier, the prospect of mouth watering new taxation revenues was dangled by OECD Secretary General Angel Gurria.
He argued that a push for transparency in the international banking system has already yielded a bonanza in new tax revenue as money crossing borders is declared in a way it previously wasn’t.
Tax dodgers have “nowhere to hide” he told the audience of G-20 officials.
“Central banks are heroes,” Gurria told Bloomberg Television in an interview. “The question is how much armory do they still have, how many bullets, particularly silver bullets?”
There’ll be plenty of one-on-one meetings over the weekend too, with the most anticipated being one planned between Mnuchin and China’s central bank chief Yi Gang. Whether the two countries can get beyond their current impasse will be keenly watched.
The G-20 finance group has gathered annually since 1999, with Japan taking presidency for the June 8-9 gathering.
The main players will hail from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, and the European Union.
Others will also attend, including officials from constituencies such as Singapore, Switzerland, as well as from multilateral organizations like the International Monetary Fund.