G7 endorses global rate
Historic agreement to reform tax systems and set corporate minimums
Finance ministers from wealthy G7 nations on Saturday endorsed a global minimum corporate tax rate of at least 15 per cent, rallying behind a Us-backed plan targeting tech giants and other multinationals accused of not paying enough.
US Treasury Secretary Janet Yellen hailed the “unprecedented commitment”, saying in a statement that a global minimum tax “would end the race to the bottom in corporate taxation”.
Following the two-day gathering in London, the G7 said it would “commit to a global minimum tax of at least 15 per cent on a country by country basis”.
The G7 – comprising Britain, Canada, France, Germany, Italy, Japan and the US – said it hoped to reach a final tax agreement at the July gathering of the expanded G20 finance ministers group.
The G7 also committed to making companies carry out mandatory reporting regarding the climate impact of their investments.
It additionally said it will continue to support “the poorest and most vulnerable countries as they address health and economic challenges associated with Covid-19”.
Regarding the commitment on taxation, Britain’s Treasury noted that “the largest and most profitable multinationals will be required to pay tax in the countries where they operate – and not just where they have their headquarters”.
British Finance Minister Rishi Sunak, who chaired the talks, expressed delight at “a historic agreement to reform the global tax system”.
The landmark move comes as governments seek to repair finances battered during the pandemic by slashed tax receipts plus vast spending and borrowing.
The London gathering has also prepared the ground for a summit of G7 leaders in Cornwall, southwest England, starting on Friday.
Momentum has grown behind the Us-led plans to limit the ability of multinationals such as 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 outbreak.
US President Joe Biden had called for a unified minimum corporate tax rate of 15 per cent in negotiations with the Organisation for Economic Co-operation and Development, and the G20.
OECD secretary-general Mathias Cormann called the G7 agreement “a landmark step toward the global consensus necessary to reform the international tax system”.