Pretoria: Finance Minister Enoch Godongwana emphasized the significance of a global minimum tax in fortifying the tax base of developing countries and promoting a fairer global tax system. The Minister’s remarks came during a panel discussion on taxation, conducted on the sidelines of the ongoing G20 Finance Ministers’ and Central Bank Governors’ meeting.

According to South African Government News Agency, Godongwana highlighted the efforts made over the past decade to achieve a transparent and efficient global tax system. He commended the work of the G20 and the OECD on addressing base erosion and profit shifting, which has encouraged collaboration towards a fair and sustainable tax system benefiting all nations.

Godongwana elaborated that the global minimum tax is a vital advancement towards strengthening tax bases, particularly for developing countries. He explained that this tax policy allows countries to reinforce their domestic resources by ensuring multinationals are adequately taxed, regardless of their operational jurisdictions.

Despite the progress, Godongwana acknowledged the need for further action in implementing international tax reforms universally. He pointed out the complexities within the global tax system, particularly affecting developing nations with limited capacity to manage intricate tax issues like transfer pricing.

He also emphasized that these capacity constraints hinder developing countries from engaging in crucial information-sharing activities, necessary for transparency in capital flows, asset allocation, and ownership.

Godongwana reiterated the importance of international cooperation and information access in mitigating complex tax structures’ impact. He urged the United Nations to play a supportive role in voicing developing countries’ challenges, stressing that the UN’s involvement should complement, not compete with, the G20 processes.

He concluded by encouraging collective efforts, stating that embracing diversity leads to more effective solutions. The Minister underscored that cooperative approaches could yield sustainable outcomes, benefiting all nations involved.