MNI: EU FinMins Want G20 Awareness of Global Risks - Draft Doc

--Document To Be Officially Adopted by Ecofin Mar 13

--Reflects EU Debate on Taxation of Digital Economy

by Jean Comte

     BRUSSELS (MNI) - Group of 20 member countries must remain aware of risks in

the global economy, build a positive narrative on technological progress and

intensify work on tax transparency, European Union finance ministers will say,

according to a draft terms of reference drawn up ahead of the Mar 17/20 next

meeting.

     The draft document, obtained by MNI, outlines the EU's main request

regarding the drafting of the final communique. It has already been agreed at a

technical level, and is expected to be officially endorsed at a meeting of EU

finance ministers on Mar 13.

     On the economic outlook, the draft document emphasizes the "ongoing

broad-based GDP expansion", but asks to focus policies on "risks to the outlook"

-- implementing structural reforms, paying attention to quality of public

investment, and staying aware of "global imbalances".

     One sentence repeats the European commitment to "keep the global economy

open and rules-based and global economic cooperation on track" -- presumably a

reference to the recent U.S. protectionist moves.

     On the structural change to the economy caused by technological progress,

the document urges keeping a positive narrative, while ensuring that growth

stays "inclusive" while labour market stays "well-functioning".

     --DIGITAL TAXATION

     The draft document also feeds in a World- and EU-level debate on taxation

of the digital economy.

     After a push from 4 member States (France, Germany, Italy, Spain) last

September, the EU decided to work on a legal text ensuring that all digital

companies are subject to some minimum level of taxation in Europe. The proposal

is currently expected to be unveiled on Mar 21. It will focus on turnover

generated in Europe by use of personal data for advertisements purposes,

according to one EU source involved in the drafting of the law.

     But a group of member States (mainly Luxembourg, Ireland and Malta) are

reluctant to see such a levy, arguing that the work should be done at G20 level,

through the OECD "BEPS" plan. The OECD is expected to present where it stands on

the issue during the Buenos Aires meeting.

     The EU draft terms of reference are therefore showing a carefully crafted

compromise -- insisting that "a global solution is the preferred avenue", but

that several countries "are interested in temporary [EU] measures" in the

meantime.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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