G7 backs 15% global corp tax

It is likely to raise billions of dollars to help governments cope with the aftermath of Covid-19

LONDON: The United States, Britain and other leading nations reached a landmark deal on Saturday to pursue higher global taxation on multinational businesses such as Google, Facebook, Apple and Amazon.

In a move that could raise hundreds of billions of dollars to help governments cope with the aftermath of Covid-19, the Group of Seven (G7) large advanced economies agreed to back a minimum global corporate tax rate of at least 15%. Companies will also have to pay more tax in the countries where they make sales.

Exactly which big companies will be covered, and how governments divide up tax revenue, is still to be agreed.

“G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” British finance minister Rishi Sunak said after chairing a two-day meeting in London.

US treasury secretary Janet Yellen said the “significant, unprecedented commitment” would end what she called a race to the bottom on global taxation.

German finance minister Olaf Scholz said the deal was “bad news for tax havens around the world”.

The 15% is above the level in countries such as Ireland but below the lowest level in the G7. Amazon and Google welcomed the agreement and Facebook said it would likely pay more tax.

Nick Clegg, Facebook’s vicepresident for global affairs, said, “We want the international tax reform process to succeed and recognise this could mean Facebook paying more tax, and in different places.”

France and Italy welcomed the tax agreement, although French finance minister Bruno Le Maire said he would fight for a higher global minimum corporate tax rate, describing 15% as a “starting point”.

The G7 also committed to making companies carry out mandatory reporting regarding the climate impact of their investments.