Tuesday, 26 October 2021

G7 nations reach agreement over global corporate tax

Rousseau/PA Wire/Pool via REUTERS

LONDON – Finance ministers from wealthy G7 nations have endorsed a global minimum corporate tax of at least 15%, rallying behind a US-backed plan targeting tech giants and other multinationals accused of not paying enough.

US Treasury Secretary Janet Yellen hailed the “unprecedented commitment”, saying in a statement that a global minimum tax “would end the race to the bottom in corporate taxation”.

Facebook even got behind the move despite the social media giant facing the prospect of having to pay more tax – while non-governmental organisations said it did not go far enough.

Following the two-day gathering in London, the G7 said in a final communique that it will “commit to a global minimum tax of at least 15% on a country by country basis”.

The G7 – comprising Britain, Canada, France, Germany, Italy, Japan and the United States – said it hoped to reach a final tax agreement at the July gathering of the expanded G20 finance ministers group.

Minister for Finance Paschal Donohoe also attended the discussions, in his capacity as the current president of the Eurogroup of 19 countries that use the single currency.

The G7 also committed to making companies carry out mandatory reporting regarding the climate impact of their investments.

It additionally said it will continue to support “the poorest and most vulnerable countries as they address health and economic challenges associated with Covid-19”.

Regarding the commitment on taxation, Britain’s Treasury noted that “the largest and most profitable multinationals will be required to pay tax in the countries where they operate – and not just where they have their headquarters”.

Welcoming the move, Facebook’s vice president of global affairs Nick Clegg said that the company wanted “the international tax reform process to succeed and recognise this could mean… paying more tax, and in different places”.

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