Taxation dominates G20 gathering in Riyadh

SAMA governor Ahmed Alkholifey at the G20 meeting. (Reuters)
Short Url
Updated 22 February 2020

Taxation dominates G20 gathering in Riyadh

  • Officials express optimism on the tackling of tax evasion and the continued strength of the financial sector globally

RIYADH: The two-day G20 Finance Ministers and Central Bank Governors meeting kicked off in Riyadh on Saturday with taxation dominating the agenda.

Saudi Finance Minister Mohammed Al-Jadaan said this year would represent a key test for tax transparency worldwide.

“It gives us the opportunity to assess what we have achieved collectively in the area of tax transparency and discuss possible ways to encourage further progress, and provides a platform to discuss the way forward to address the tax challenges arising from the digitization of the economy,” he said. 

The minister said that G20 states and the OECD had already achieved major successes in tackling tax evasion. “Today, members of the G20/OECD Global Forum on Transparency and Exchange of Information for Tax Purposes work together to implement the internationally agreed standards on tax transparency,” said Al-Jadaan. “These standards balance the need to access information for tax purposes and the need to protect taxpayers’ confidentiality.”

He said that more than 6,100 bilateral exchange agreements had been signed and that tax-authorities worldwide were now collecting tax revenues utilizing the automatic exchange of information mechanism.

“Information on 50 million financial accounts was exchanged by the end of 2019 for a total value of about €5 trillion ($5,4 trillion), and almost €100 billion in additional tax revenues have been identified, thanks to voluntary compliance mechanisms and investigations,” he said.

Dr. Ahmed Alkholifey, Governor of the Saudi Arabian Monetary Authority (SAMA) said that the global economy had faced headwinds caused by geopolitical uncertainties and social unrest in some parts of the world.

But he said the good news was that the financial sector, and notably the banking sector, has continued to strengthen in both advanced and emerging economies.

The governor also said he expected to see an improvement in the Saudi economy this year.

“As an open economy, Saudi Arabia, just as other countries in the region, is under the influence of these global developments. What I can say, in a nutshell, is that GDP growth in Saudi Arabia is projected to see an upturn in 2020.”

Ministers and central bank governors from the G20 countries and guest nations, as well as heads of international and regional organizations are attending the gathering in Saudi Arabia, the first Arab nation to hold the G20 presidency.

Crash landing: Global air transport hit hard by virus

Updated 8 min 10 sec ago

Crash landing: Global air transport hit hard by virus

  • The pandemic has led to the collapse of South Africa’s Comair and South African Airways (SAA)

PARIS: The coronavirus has battered the air transport sector by grounding planes, resulting in layoffs, bankruptcies and rescue plans.

The International Air Transport Association (IATA) has estimated global airlines will lose $314 billion in 2020 revenues. That’s a 55 percent dive compared to 2019, and air traffic will not bounce back until 2023, the IATA says.

Latin America’s largest airline LATAM, with over 42,000 employees, became the latest carrier to file for bankruptcy on May 26 in the US, under Chapter 11 protection, allowing it to restructure without pressure from creditors, just two weeks after Colombia’s Avianca, with 20,000 staff, did the same.

Cash-strapped giant Virgin Australia also collapsed on April 21, going into administration.

The airline had appealed for a Aus$1.4 billion ($930 million) loan, but the government refused.

The pandemic has also led to the collapse of South Africa’s Comair and South African Airways (SAA), the UK’s Flybe and four subsidiaries of Norwegian Air Shuttle in Sweden and Denmark.

Air Canada plans to lay off at least 19,000 employees. British Airways will shed 30 percent of its workforce, US Delta Air Lines will carry out 10,000 redundancies, while Scandinavia’s SAS will lay off 5,000 jobs.

The damage to the air sector extends beyond the airlines. US plane manufacturer Boeing has announced 16,000 layoffs. In the engine sector, US manufacturer General Electric and the UK’s Rolls-Royce have also slashed 12,600 and 9,000 jobs respectively.

German airline group Lufthansa, meanwhile, announced on May 25 it had struck a $9.9 billion rescue deal with the government, under which Berlin would become its main shareholder.

But two days later the airline group wavered, saying its supervisory board was currently “unable to approve” the deal over fears of over-harsh conditions from EU competition watchdogs.

Also in Germany, charter firm Condor, a subsidiary of bankrupt travel agency Thomas Cook, secured €550 million in loans, underwritten by the state.

France and the Netherlands have rushed to the rescue of Air France-KLM with a plan of between nine and €11 billion.

Most of the big American air companies have asked for support from a massive $2.2 trillion US stimulus package intended to help impacted industries, of which $50 billion is earmarked for the civil aviation sector.

Italy has decided to nationalize Alitalia.

Switzerland has guaranteed €1.2 billion in loans to Swiss and Edelweiss, two subsidiaries of Lufthansa.

New Zealand has loaned some NZ$900 million ($551 million) to Air New Zealand.

Dubai and Turkey have also announced that they will come to the aid of Emirates and Turkish Airlines, but have not yet provided figures.