The bloc committed itself to a target of a global minimum corporate tax rate of “at least 15%”, which would target mainly tech multinationals.
The G7 finance ministers announced on Saturday a “historic” commitment to apply a global minimum tax and better distribution of tax revenues from large companies, particularly internet giants, after a two-day meeting in London.
The G7 committed to a target of a global minimum corporate tax rate of “at least 15%,” according to a joint statement, which also mentions an agreement on better sharing of the rights to assess the profits of the big multinationals.
The announcement of the group of seven great powers was described as “historic” and a “moment of pride” by the British Minister of Finance, Rishi Sunak, who chaired the meeting as the host country of the G7.
The main powers of the G7 (United Kingdom, France, Italy, Canada, Japan, Germany and the United States), taking advantage of the renewed interest of the US administration in this issue since Joe Biden took office, want to achieve a global reform of the corporation tax following the work done so far in the OECD.
The measure mainly targets large technology companies, many of them American, which pay ridiculous taxes despite making profits of tens or even hundreds of billions of dollars, thanks to the fact that they are domiciled in countries where the corporate tax rate it is very low or even nil.
The G7 deal on finance “is a first step, and next month we have a meeting of G20 finance ministers to move forward,” Sunak said, stating that the compromise reached on Saturday “will inject equity into our global tax system.” .
The G7 wants to end tax competition between countries, which they believe hurts everyone, at a time when the coffers of many states are empty due to the pandemic, while the internet giants have benefited from the crisis.
The US administration had initially suggested a global rate of 21%, before changing its mind and placing it at 15%, a level that for example France considers “a minimum”, “a starting point”.
“We want to work with our partners from the G7, the G20 and the OECD to try to have a more ambitious rate,” said French Economy Minister Bruno Le Maire on Friday in London, who after Saturday’s agreement spoke of a “historic stage ”In the“ fight ”against“ tax evasion and optimization ”.
“It was about time some of the most powerful economies in the world forced multinationals, including the tech and pharmaceutical giants, to pay their fair share of taxes. However, setting a global minimum corporate tax rate of only 15% is too low, ”reacted Gabriela Bucher, from the NGO Oxfam.
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Several countries, including France, the United Kingdom, Italy or Spain, have already implemented their own digital tax, and conversations with the United States also focused on the timetable for withdrawing these national measures in favor of international reform.
“It is something we have been talking about for almost a decade and, for the first time, today we have an agreement on tangible principles of how this reform should be. And that’s a big step forward, ”said Rishi Sunak.
However, he admitted that “we still have to go to the G20 and reach an agreement with a broader group of countries, so it is difficult to say when a final agreement will be reached,” he said.
This process should last several more years, since, in addition to the group of 20, it will be necessary to obtain the approval of the 140 countries working on the tax reform project within the OECD.
The challenge will be to convince countries that have built their economies on the basis of particularly low tax rates for companies, such as Ireland (12.5%) and that have attracted the European headquarters of many multinationals.
