The Treasury Ministers of the United Kingdom, France, Italy, Japan, Canada, Germany and the United States met in London to discuss the White House’s plan for an international tariff floor. The deal ends the transatlantic tensions that have undermined years of negotiations between around 140 countries to modernize outdated tax rules. The deal also paves the way for a broader G20 deal next month.
The aim of the agreement is to prevent large companies from shifting their profits, for example via mailbox companies, to avoid tax evasion. Companies have to pay more taxes in the countries in which they operate.
“I am pleased to announce that, after years of discussion, the G7 finance ministers have reached a historic agreement today on reforming the global tax system,” UK Treasury Secretary Rishi Sunak said in a statement.
The reform makes the system fit for the global digital age. He also described the deal as critical to ensuring that “the right companies pay the right taxes in the right place”.
According to her US American Janet Yellen, a global minimum tax could end the “race to the bottom” in corporate taxes. She also says the agreement will bring justice to the middle class and workers in the United States and around the world.
French finance minister Bruno Le Maire said the plan also covers digital taxes and guarantees a minimum rate of at least 15 percent. And the G7 countries will seek the support of the G20, starting with the meeting in Venice next month.
The G7 had previously indicated that many technical details would have to be decided in the coming weeks. A breakthrough in the distribution of tax revenue among technology companies was achieved on Friday.
The G7 also agreed on the principle of a minimum global corporate tax rate for large companies of at least 15%. The measures will also help eliminate tax evasion. This has always proven to be difficult, as the USA did not want to differentiate between digital and other companies in its new rules. However, there was a desire from Europe to deal openly with technology companies. A final agreement may not be reached until autumn this year, also because some states first have to pass national laws.
Check out the trending news videos in the playlist below:
Unlimited free access to Showbytes? And it can!
Log in or create an account and don’t miss any of the stars.