Pfizer Stock – Mexico to see net revenue gain from corporate tax revamp, finance minister says
VENICE, July 11 (Reuters) – Mexican Finance Minister Arturo Herrera told Reuters that the global deal to revamp taxation of multinational companies should easily win approval from Mexico’s Congress because it will expand the country’s revenue base, but consideration will likely wait until September 2022.
Herrera said in an interview on the sidelines of this weekend’s G20 finance leaders meeting in Venice, Italy that the OECD tax deal was a “no brainer” for Mexico.
The deal, which establishes a global minimum corporate tax of at least 15% and allows the largest multinational firms to be taxed in countries where they sell products and services, was formally endorsed by the G20 ministers on Saturday.
“I think for us, this is something that should go smoothly, because it’s going to be a net inflow of taxes,” Herrera said of legislative approval. “And these are taxes related to economic activity that happen in the country. But currently, because of profit shifting, our base suffers.”
A final agreement on the global minimum tax is expected in October, which would miss by a month Mexico’s annual amendments to its tax laws. This means that Mexico’s Congress would likely ratify it in September 2022, Herrera said.
U.S. Treasury Secretary Janet Yellen said on Sunday that final details of the reallocation of taxing rights for large companies, including technology giants such as Google, Facebook and Amazon.com, could take longer to complete than the global minimum tax, possibly by the spring of 2022.
If not delayed further, the reallocation portion could still meet a September 2022 timeframe for Mexico.
G20 finance leaders discussed ways to increase access to vaccines but announced no major new commitments in Venice. . They also expressed concern about the spread of new COVID-19 variants dealing a setback to broad economic recovery.
Herrera said that there may need to be a new multilateral option for developing countries to receive more vaccines besides the COVAX vaccine fair distribution scheme co-led by the World Health Organization, which he called a disappointment.
Out of 254 million vaccine doses procured by Mexico, more than enough to vaccinate Mexico’s 126 million population, the largest share was through COVAX. Herrera had high hopes for a smooth delivery, but until a month ago, “the vast majority of the vaccines received were non-COVAX,” he said, adding that these came directly coming directly from AstraZeneca, Pfizer–BioNTech, CanSino, Sputnik and Johnson & Johnson.
“COVAX is a great idea, but it has been poorly implemented,” he added.
Herrera, who is soon leaving Mexico’s Finance Ministry to become the country’s central bank chief, also told Reuters that he believes inflation is under control in Mexico without lasting price increases.
“Most of the information makes us think that at least right now, some of the optics we are seeing are temporary, or related to the pandemic,” he said referring to supply bottlenecks and shifts in demand that has driven up prices for specific goods such as laptop computers.
“We need to watch it, but we are reasonably optimistic that most of the movements in prices are going to be temporary.” (Reporting by David Lawder)