Connect with us

Hi, what are you looking for?

Business

G7 nations reach 'historic' agreement over global corporate tax

Finance ministers from wealthy G7 nations on Saturday pledged to commit to a global minimum corporate tax of at least 15 percent.

Hopes for 'historic' global corporate tax deal as G7 meets
Momentum is building for a minimum level of corporate tax to prevent multinationals like tech giants from playing the system to boost profits.  - Copyright POOL/AFP Stefan Rousseau
Momentum is building for a minimum level of corporate tax to prevent multinationals like tech giants from playing the system to boost profits.  - Copyright POOL/AFP Stefan Rousseau
Anna MALPAS, Ben PERRY

Finance ministers from wealthy G7 nations on Saturday pledged to commit to a global minimum corporate tax of at least 15 percent, rallying behind a US-backed plan.

“We… commit to a global minimum tax of at least 15 percent on a country by country basis,” said a statement at the conclusion of their London meeting.

The G7 hopes to reach a final agreement at the July gathering of the expanded G20 finance ministers group, it added.

“I’m delighted to announce that G7 finance ministers… have reached a historic agreement to reform the global tax system,” said British finance minister Rishi Sunak, who chaired the two days of talks held in person after an easing of Covid-19 restrictions.

It was attended by counterparts from Canada, France, Germany, Italy, Japan and the United States.

Sunak said the G7 had agreed to make the global tax system “fit for the global digital age and crucially to make sure that it’s fair so that the right companies pay the right tax in the right places”.

He thanked his counterparts for striking “a deal of historic significance that finally brings our global tax system into the 21st century”.

The landmark move is aimed at getting multinationals — especially tech giants — to pay more into government coffers, which have been severely hit during the pandemic.

The talks have prepared the ground for a broader summit of G7 leaders in Cornwall, southwest England, starting Friday.

US President Joe Biden is set to attend next week’s summit on his first foreign tour since taking office in January, while later Saturday US Treasury Secretary Janet Yellen will hold a press conference following the G7 meeting.

– ‘Right time’ –

Momentum has grown behind the US-led plans to limit the ability of multinationals like tech giants to game the tax system to boost profits, especially at a time when economies around the world are reeling from the impact of the coronavirus pandemic.

German finance minister Olaf Scholz on Friday told reporters it was the “right time” for a global tax deal given the vast sums spent by governments “to protect citizens, stabilise the economy and save jobs” since last year.

Biden had called for a unified minimum corporate tax rate of 15 percent in negotiations with the Organisation for Economic Co-operation and Development (OECD) and G20.

French economy minister Bruno Le Maire had told journalists in London that 15 percent is “a minimum. For us, it’s a starting point”.

Along with its G7 and G20 partners, France wants “a more ambitious level of taxation”, the minister said, with the current pandemic crisis showing that “tax evasion, the race towards the lowest possible level of taxation, is a dead end”.

At the same time, Ireland has expressed “significant reservations” about Biden’s plan.

Its 12.5-percent tax rate is one of the lowest in the world, prompting tech giants such as Facebook and Google to make Ireland the home of their European operations.

Proponents argue that a minimum tax is necessary to stem competition between countries over who can offer multinationals the lowest rate.

They say that a “race to the bottom” saps precious revenues that could go to government priorities like hospitals and schools.

Advertisement. Scroll to continue reading.

Corporate tax is one of two pillars in efforts for global fiscal reform, the other being a “digital tax” to allow countries to tax the profits of multinationals headquartered overseas.

Britain wants multinationals to pay taxes that reflect their operations, as governments seek to repair finances battered by slashed tax receipts plus vast spending and borrowing during the pandemic.

Written By

With 2,400 staff representing 100 different nationalities, AFP covers the world as a leading global news agency. AFP provides fast, comprehensive and verified coverage of the issues affecting our daily lives.

You may also like:

Entertainment

This October, renowned Japanese pianist Hayato Sumino will step on Poland's Warsaw Philharmonic Hall stage in the 18th Chopin International Piano Competition.

Life

The Oklahoma Republican party faced fierce criticism for a Facebook post likening Covid-19 vaccine mandates to the persecution of Jewish people in Nazi Germany.

Business

Crispy bacon strips Source - Didriks from Cambridge, MA/CC SA 2.0.On January 1, 2022, a new law in California that changes animal welfare rules...

Tech & Science

The recent ransomware attack on Kaseya has demonstrated the very real risk facing organizations today.