The Group of Seven nations reached a historic agreement on Saturday aimed at making it difficult for the world’s largest companies to evade taxes.
Under the agreement, reached at a meeting of G7 finance ministers in London, members agreed to set a minimum global corporate tax of 15%, a move they believe will force companies to pay taxes. In the countries where they set up their business instead. from draining profits. . From abroad to tax havens.
While the Group of Seven, which includes the United States, Japan, Canada and major European countries, does not have the power to impose global standards, the agreement of seven of the world’s largest industrialized nations is seen as an important step toward creating global businesses. Tax collection.
“This is a truly historic agreement and I am proud that the G7 has demonstrated collective leadership at this critical time for the recovery of our global economy,” British Chancellor Rishi Sunak, who chaired the meeting, said in a statement.
US Treasury Secretary Janet Yellen said in a statement that a global minimum tax would end the “race to the bottom in corporate taxation.”
According to what the G7 ministers described as a “two-pillar” strategy, the new framework would apply to large global companies with profit margins of 10% or more. These companies will be required to pay taxes on 20% of the profits they earn above the 10% threshold in the countries where they have generated revenue.
The second pillar is the 15% corporate tax rate, which ministers believe will create a “level playing field” by removing incentives to shift profits between jurisdictions to avoid taxes. Speaking to reporters on Saturday afternoon, Yellen said the non-tax payment enforcement mechanism will pressure tax haven countries to join the scheme.
“She has a way of attracting naysayers,” Yellen said.
The changes, if implemented, would have a special impact on the world’s leading technology companies, such as Amazon, Facebook and Google, which have long been able to evade taxes in many of the jurisdictions in which they operate.
The reform, which European countries such as France and Germany have long advocated, received new impetus after US President Joe Biden took office in January and made it a priority.
Now that the plan, which has been under discussion for several years, has been approved by the G7, it is expected to be resumed at the next G-20 meeting, scheduled for July in Venice. An agreement there – the G-20 countries account for 80 per cent of global GDP – would be a big step toward putting the fiscal plan into action.
Aaron Lorenzo contributed to this report.