G7 leaders agree on corporate minimum tax

  • G7 leaders agree on corporate minimum tax

G7 leaders agree on corporate minimum tax

The U.S. has proposed levying the new global minimum tax only on the world's 100 largest and most profitable companies.

The new policy is thought to be aimed at the likes of tech giants Amazon and Microsoft.

G-7 finance ministers meeting in London also endorsed proposals to make the world's biggest companies - including USA based tech giants - pay tax in countries where they have lots of sales but no physical headquarters.

Speaking after the meeting, Mr Sunak said: "I am delighted to announce that today after years of discussion G7 finance ministers have reached a historic agreement to reform the global tax system".

"Securing a global agreement on digital taxation has also been a key priority this year - we want companies to pay the right amount of tax in the right place, and I hope we can reach a fair deal with our partners".

Biden had called for a unified minimum corporate tax rate of 15 percent in negotiations with the Organisation for Economic Co-operation and Development (OECD) and G20.

"These seismic tax reforms are something the United Kingdom has been pushing for and a huge prize for the British taxpayer - creating a fairer tax system fit for the 21st century", said Sunak.

A G7 deal on a minimum corporate tax rate is "within sight", finance ministers from France, Germany, Italy and Spain have confirmed before a two-day meeting of the world's richest nations.

Although the deal may not have gone as far as some hoped - President Biden has been calling for a global minimum threshold for corporation tax set at between 15pc and 21pc to stop companies shifting their profits to havens around the world - it marks the biggest overhaul of worldwide tax rules for decades, with the current system drawn up in the pre-digital age.

The fairer system will mean the United Kingdom will raise more tax revenue from large multinationals and help pay for public services here in the United Kingdom, the Treasury department said.

Former UK deputy prime minister Sir Nick Clegg, who is now Facebook's vice president for global affairs, said the social media giant recognised that the proposed tax reform could mean it pays "more tax, and in different places".

"The commitment to a minimum effective tax rate of at least 15 percent is a promising start".

The Chancellor said there had been "huge progress" on an issue that had been discussed for nearly a decade.

Agreement on a 15% baseline is likely to cause tensions with Dublin, with Ireland so far resistant to raising its corporation tax rate above 12.5%. "We are still working on this very tricky point of the rate". Britain wants multinationals to pay taxes that reflect their operations, as governments seek to fix finances battered by slashed tax receipts plus vast spending and borrowing during the pandemic.

"It's going to go right to the wire", one source close to the talks said.

He hailed the agreement and said it was a "historic" opportunity to reform the global tax system.

Deputy director Matt Kilcoyne said: "These proposals are not in the UK's interest and Rishi has sold Britain short. The Chancellor's own policies, scuppered by his own hubris".