A group of the world’s richest countries struck a landmark deal on Saturday to close cross-border tax doors used by some of the world’s largest companies.
The group of seven said it would support a minimum corporate tax rate of at least 1
“After years of discussions, the G7 finance ministers have reached a historic agreement to reform the global tax system to adapt to the global digital age,” British Finance Minister Rishi Sunak told reporters.
The agreement, which could form the basis of a global pact next month, aims to end a decades-long “race to the bottom” in which countries have vied to attract corporate giants with ultra-low tax rates and exemptions.
This, in turn, costs their public coffers hundreds of billions of dollars – a shortfall that they now have to make up even more urgently to pay for the huge costs of helping economies devastated by the coronavirus crisis.
Ministers met face to face in London for the first time since the start of the COVID-19 pandemic.
According to a copy of the final agreement seen by Reuters, G7 ministers said they would “commit to a global minimum tax of at least 15% for each country by country.”
“We are committed to reaching a fair solution for the allocation of tax rights, with market countries receiving tax rights on at least 20% of profits in excess of the 10% margin for the largest and most profitable multinationals,” the text added.
Ministers also agreed to make companies declare their environmental impact in a more standard way, so that investors can more easily decide whether to finance them, a key goal for the UK.
Wealthy nations have struggled for years to agree on a way to raise more revenue from large multinationals such as Google, Amazon and Facebook, which often report profits in jurisdictions where they pay little or no tax.
The administration of US President Joe Biden has given a stalemate to a stalemate by proposing a minimum global corporate tax rate of 15%, above the level in countries such as Ireland but below the lowest level in the G7.
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