San Francisco Chronicle - (Sunday)
Nations back pact to deter tax dodging by large firms
LONDON — The Group of Seven wealthy democracies agreed Saturday to support a global minimum corporate tax of at least 15% in order to deter multinational companies from avoiding taxes by stashing profits in lowrate countries.
G7 finance ministers meeting in London also endorsed proposals to make the world’s biggest companies — including U.S.based technology giants — pay taxes in countries where they have substantial sales but no physical headquarters.
Britain’s Treasury chief Rishi Sunak, the meeting’s host, said the deal would “reform the global tax system to make it fit for the global digital age and crucially to make sure that it’s fair.”
U.S. Treasury Secretary Janet Yellen, who attended the London meetings, said the agreement “provides tremendous momentum” towards reaching a global deal that “would end the racetothebottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world.”
France cheered Saturday’s agreement and claimed credit for acting as its catalyst.
“We made it! After 4 years of battle, a historic accord was reached with G7 member states,” French Finance Minister Bruno Le Maire tweeted.
The meeting of finance ministers came ahead of an annual summit of G7 leaders scheduled for June 1113 in Cornwall, England. The U.K. is hosting both sets of meetings because it holds the group’s rotating presidency.
The endorsement from the G7 could help build momentum for a deal in wider talks among more than 140 countries being held in Paris as well as a Group of 20 finance ministers meeting in Venice in July.
The G7 has also been facing pressure to provide vaccines for lowincome countries facing new surges of COVID19 infections and to finance projects to combat climate change. A statement Saturday from the twoday finance ministers’ meeting said only that they welcomed increased funding commitments by member countries and looked forward to more.
International discussions on the tax issue gained momentum after U.S. President Biden backed the idea of a global minimum of at least 15% on corporate profits.
The G7 statement echoes a U.S. proposal to simply let countries tax part of the earnings of the largest and most profitable companies — digital or not — if they are doing business within their borders.
Part of the agreement is that countries such as France that have imposed digital services taxes would remove them in favor of the global agreement. The U.S. considers those unilateral taxes to be unfair trade measures that single out U.S. tech companies such as Google, Amazon and Facebook.