The US, Britain, and other leading nations reached a landmark deal on Saturday to pursue higher global taxation on multinational businesses such as Google, Apple, and Amazon. In a move that could raise hundreds of billions of dollars to help them cope with the aftermath of COVID-19, the Group of Seven large advanced economies agreed to back a minimum global corporate rate of no less than 15 percent and for companies to pay more tax in the markets where they sell goods and products and services.
“G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” British finance minister Rishi Sunak said after chairing a two-day assembly in London.
US Treasury Secretary Janet Yellen said the “remarkable, unprecedented commitment” would end what she called a race to the backside on global taxation.
The deal, which was once years in the making, also promises to end national digital products and services taxes levied by Britain and other European countries which the USA said unfairly targeted U.S. technology giants.
Alternatively, the measures will first wish to find broader agreement at a assembly of the G20 – which includes quite a few emerging economies – because of take place next month in Venice.
“It’s complicated and this can be a first step,” Sunak said.
The ministers also agreed to move towards making companies declare their environmental have an effect on in a more standard way so investors can made up our minds more easily if to fund them, a key goal for Britain.
Rich nations have struggled for years to agree a way to bring more revenue from large multinationals such as Google, Amazon, and Facebook, which ceaselessly book profits in jurisdictions where they pay little or no tax.
US President Joe Biden’s administration gave the stalled talks fresh impetus by proposing a minimum global corporation tax rate of 15 percent, above the level in countries such as Ireland but below the lowest level in the G7.
Germany and France also welcomed the agreement, even if dressing Finance Minister Bruno Le Maire said he would fight for a higher global minimum corporate tax rate than 15 percent, which he described as a “starting point”.
German finance minister Olaf Scholz said the deal was once “naughty news for tax havens world wide”.
“Companies will no longer be ready to dodge their tax obligations by booking their profits in the lowest-tax countries,” he added.
Irish finance minister Paschal Donohoe, whose country is potentially a big loser with its 12.5% tax rate, said any global deal also needed to take account of smaller nations.
Sunak said the deal was once a “enormous prize” for taxpayers, but it was once too soon to realize what quantity of money it would raise for Britain.
The agreement does not make lucid precisely which businesses will be covered by the rules, referring only to “the largest and most ecocnomic multinational enterprises”.
European countries have feared that a commerce such as Amazon could slip through the net as it reports lower profit margins than most other well-known technology companies.
© Thomson Reuters 2021
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