G7 nations reach historic agreement to tax multinationals Business and Economic News

A group of the world’s richest nations agrees on a minimum corporate tax rate to close the cross-border tax gaps used by some corporations.

The finance ministers of the seven Group (G7) rich countries reached an important agreement on Saturday in favor of creating a global minimum tax rate on at least 15 per cent in an effort to close the cross-border tax holes used by some corporations.

“We … are committed to a global minimum tax of at least 15 per cent for each country,” the G7 said in a statement at the end of the London meeting.

Major economies want to prevent multinationals from shifting profits – and tax revenues – to low-tax countries, regardless of where sales are made.

Increasingly, revenue from intangible sources such as patents, software, and royalties on intellectual property drugs has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional countries of origin.

The G7 agreement takes on a much broader existing effort. The Organization for Economic Co-operation and Development has been coordinating tax negotiations in 140 countries for years on rules for taxing digital cross-border services and reducing the erosion of the tax base, including the global minimum corporate tax.

The G7 hopes to reach a final agreement at a meeting of the G20 extended finance ministers in July, he added. If a broad consensus is reached, it will be very difficult for any low-tax country to try to block the deal.

“I am pleased to announce that the G7 finance ministers … have reached a historic agreement to reform the global tax system,” said British Finance Minister Rishi Sunak, who led two days of talks after easing the COVID-19 cuts. .

Peers from Canada, France, Germany, Italy, Japan and the United States participated.

Sunak said the G7 had agreed to ensure that the global tax system is “appropriate for the global digital age and, above all, for fair companies to pay the right taxes in the right places”.

He thanked his members for “finally achieving the great historical significance that our global tax system brings to the 21st century.”

The most important move is for multinationals, especially tech giants, to pay more in government coffers that have been hit hard during the pandemic.

Interviews have prepared for a wider summit of G7 leaders in Cornwall, south-west England, from Friday.

U.S. President Joe Biden will attend next week’s summit on his first overseas tour since taking office in January, while U.S. Treasury Secretary Janet Yellen will give a press conference after the G7 meeting.