Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman, participated in the G20 Finance Ministers and Central Bank Governors meeting in Fukuoka, Japan, on June 8–9, 2019. Accompanied by senior officials from the Ministry of Finance and the RBI, the Minister addressed critical global economic challenges ranging from digital taxation to disaster-resilient infrastructure.
Taxing the Digital Economy
Smt. Sitharaman emphasized the urgent need for a global consensus on taxing digital economy companies. Key points included:
Significant Economic Presence: She strongly supported a solution based on a business's "purposeful and sustained interaction" with a country's economy, a concept pioneered by India.
BEPS and Transparency: She lauded the progress made under the Base Erosion and Profit Shifting (BEPS) agenda and expressed confidence in reaching an equitable, simple, and consensus-based global solution by 2020.
Automatic Exchange of Information (AEOI): Welcoming the global commencement of AEOI, she urged the G20 to expand this network to include more jurisdictions and called for a "toolkit of defensive measures" against non-compliant tax havens.
Combatting Fugitive Economic Offenders
The Minister called for enhanced international cooperation to deal with offenders who flee their home countries to evade legal consequences.
India’s Legal Precedent: She highlighted India’s Fugitive Economic Offenders Act, which denies fugitives access to courts until they return and allows for the confiscation and sale of their properties.
Investment-based Citizenship: She criticized the use of investment schemes to obtain residency or citizenship to escape the law, urging coordinated global action to close these loopholes.
Global Economic Stability and Infrastructure
Smt. Sitharaman raised concerns regarding global current account imbalances and their detrimental impact on emerging markets.
Corporate Cash Reserves: She questioned whether the massive accumulation of cash by large corporations signaled a reluctance to invest, which could lead to market power concentration and stifled growth.
Disaster Resilience: In the infrastructure session, she emphasized the need for cost-effective and disaster-resilient infrastructure. She noted India’s collaboration with Japan to create a global Coalition on Disaster Resilient Infrastructure aligned with the Sendai Framework.
Addressing the Aging Population and Health
Discussing the Japanese Presidency’s priority of aging populations, the Minister proposed a unique solution:
Calibrated Labour Mobility: She suggested that countries with shrinking workforces allow the calibrated mobility of labor from younger nations, provided there are portable social security benefits.
Universal Health Coverage (UHC): She advocated for a holistic approach to UHC that includes traditional and complementary systems of medicine.
Bilateral Relations
On the sidelines of the summit, Smt. Sitharaman held a bilateral meeting with Mr. Philip Hammond, Chancellor of the United Kingdom. The two leaders discussed enhancing cooperation between India and the UK in several areas, specifically focusing on tax matters and economic collaboration.
