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Friday August 19th, 2022

G20 to device new tax to stop new tech giants re-investing more profits

AFP – Top G20 finance officials agreed Saturday there was an urgent need to find a global system to tax internet giants like Google and Facebook but clashed on the best way to do it.

The G20 has tasked the Organisation for Economic Cooperation and Development to fix the system that has seen some internet heavyweights take advantage of low-tax jurisdictions in places like Ireland and pay next to nothing in other countries where they make huge profits.

OECD chief Angel Gurria is presenting G20 finance ministers and central bank chiefs meeting over the weekend in the western Japanese city of Fukuoka with a "roadmap", already signed off by 129 countries, in a bid to clinch a long-term solution by 2020.

"We have to hurry up," said French Finance Minister Bruno Le Maire during a panel discussion of top policymakers before the G20 meeting officially opened.

Le Maire called for a more ambitious timeframe to forge a global consensus, saying: "The right schedule is to find a compromise by the end of this year."

British finance minister Philip Hammond said taxing internet giants fairly was a response to something that is "perceived by our population to be a gross injustice in our tax system."

Ministers are weighing the possibility of a new tax policy based on the amount of business a company does in a country, not where it is headquartered.

But there are rival proposals in the mix, including a wider US-led approach that could affect European and Asian multinationals in other sectors than technology.

US Treasury Secretary Steven Mnuchin took a blunt view in assessing the approach of Britain and France, who have already introduced their own taxes on digital players, given a lack of global consensus.

"I would say the US has significant concerns with the two current taxes that are being proposed by France and the UK but let me give them some good credit for proposing them in the sense (that) they have created an urgency to deal with this issue," said Mnuchin.

"Although I don’t like them, I do appreciate the impetus for these issues," added the top US finance official.

"We are not looking to rewrite the entire tax code, but we do need to look at the balance between what may be the issue in digital and perhaps how this new environment affects non-digital companies as well," he said.

While there were gaps on the exact make-up of the reform, the policymakers agreed there needed to be a global approach to taxing the big internet firms.

Gurria said there was a risk of "cacophony" and a "race to the bottom" without an agreed global framework and Mnuchin agreed that "having a fragmented tax approach is not good for any of us."

Ahead of the meeting, pressure group Oxfam called for "an agreement that ensures corporations are taxed based on where they make their profits rather then whichever tax haven they are based in" and said the Fukuoka meeting was a "unique chance to put a stop to corporate tax dodging and damaging tax competition".

– ‘Self-inflicted’ wounds’ –

The other topic dominating the G20 finance ministers’ meeting is likely to be the impact of spiralling global trade conflicts on an increasingly fragile economic outlook.

International Monetary Fund chief Christine Lagarde, who is also attending the meeting in the western Japanese city of Fukuoka, has warned that tariffs and trade friction are "self-inflicted" wounds that will harm the global economy at a "delicate juncture."

The IMF has calculated that US-China tariffs imposed and threatened by the two superpowers could trim as much as 0.5 percentage points from the global economy next year — an amount $455 billion bigger than the entire economy of South Africa.

"The immediate priority is to resolve the current trade tensions," urged Lagarde in a blog post aimed at the G20.

By a quirk of the calendar, G20 trade ministers are also meeting the same weekend in Japan but the finance ministers will be tackling the current tensions and their economic consequences, officials and analysts said.

And as the meeting opened, US President Donald Trump took another potshot at Beijing, tweeting: "Many firms are leaving China for other countries, including the United States, in order to avoid paying the Tariffs. No visible increase in costs or inflation, but U.S. is taking in Billions!"

He has previously suggested he would decide whether to impose up to $325 billion of new tariffs on Beijing after the G20 summit in Osaka at the end of the month where he will meet Chinese counterpart Xi Jinping.

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Sri Lanka schedules 3-hour power cuts for Aug 20, 21: regulator

ECONOMYNEXT – Sri Lanka will impose power cuts of up to three hours on Saturday August 20 and Sunday August 21, Public Utilities Commission (PUCSL) Chairman Janaka Ratnayake said.

All areas (A, B, C, D, E, F, G, H, I, J, K, L, P, Q, R, S, T, U, V and W) will have power cuts of 1 hours and 40 minutes between 10.30 am and 06.00 pm and 1 hour 20 minutes from 06.00pm to 10.00 pm.

Click here for a detailed schedule.

The state-run Ceylon Electricity Board (CEB) said supply interruption time and restoration time will vary within 30 minutes as indicated above.

Sri Lanka’s daily scheduled power cuts that were reduced to one hour in July with power generation from hydro power plants contributing more than 50 percent to the main grid reducing thermal power plant use was extended to three hours last week due to a breakdown at the Norochcholai coal power plant.

According to officials, the breakdown happened in Unit 1 of Norochcholai which will take around two weeks to repair.

The Minister of Power & Energy said Unit 2 is undergoing scheduled maintenance work while Unit 3 will continue to operate. West Coast and other fuel power pPlants will be used to manage the supply, the ministry said. (Colombo/Aug02/2022)

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Sri Lanka guidance peg edges T-bond yield edge down

ECONOMYNEXT – Sri Lanka Central Bank’s guidance peg for interbank transactions edged down on Friday (19), while yields in Treasury bonds picked up slightly and in T-bill remain unquoted in dull trade, a day after the Central Bank announced the policy rates will remain stable, dealers said.

A bond maturing on 01. 06. 2025 closed at 27.95/28.05 percent on Friday, slightly up from 27.90/28.00 percent on Thursday.

No T-bills were quoted on Friday, dealers said.

Meanwhile Sri Lanka’s central bank announced a guidance peg for interbank transactions further weakened by three cents to 361.00 rupees against the US dollar on Friday from 360.97 rupees.

Data showed that commercial banks offered dollars for telegraphic transfers between 368.00 and 370.00 for small transactions.  (Colombo/ Aug 19/2022)

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Sri Lanka records 10 new COVID-19 deaths in 48 hours as case numbers rise

ECONOMYNEXT –  Sri Lanka recorded 10 COVID-19 deaths in the 48 hours from August 17 to 19 taking the country’s pandemic death toll to 16,640, health ministry data showed.

Sri Lanka is experiencing a slight increase in COVID-19 cases with the relaxation of public health restrictions relating to face masks and public gatherings.

Health authorities said the situation will be monitored constantly and have asked the general public to continue to follow basic hygiene measures in order to control the spread of the virus again in the community.

In August alone 2,924 new cases were recorded in Sri Lanka, with 84 deaths attributed to the disease.

So far in 2022, from January onward, health authorities have identified 81,157 patients to date.

Epidemiology unit data showed that 874 patients are currently receiving treatment, out of which 716 are receiving home based care.

The spread of the virus has increased with the use of public transport rising after an easing of a fuel crisis.

Sri Lanka is also facing difficulties in securing essential medicine supplies for the health sector due to a forex shortage.

Health officials said if the number of COVID-19 patients rise to a level the health sector cannot manage,  with the added issues of fuel and medical shortages, the health system might collapse.

“It is the responsibility of us all. There is no use trying to forcibly control people. We all have the responsibility to reduce or stop the spread of the virus before it gets out of control. We have been living with it for the past two years,” Deputy Director General of Health Services Dr Hemantha Herath said. (Colombo/Aug19/2022)

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