G7: Rich nations back deal to tax multinationals

The G7 group of advanced economies has reached a “historic” deal to make multinational companies pay more tax. Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business.

They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.

Tech giants Amazon and Facebook are among those likely to be affected.

The deal announced on Saturday, between the US, the UK, France, Germany, Canada, Italy and Japan, plus the EU, could see billions of dollars flow to governments to pay off debts incurred during the Covid crisis.

Negotiated over many years, it will put pressure on other countries to follow suit, including at a meeting of the G20 next month, which includes China, Russia and Brazil.

US Treasury Secretary Janet Yellen told reporters that the “historic” agreement on a global minimum tax would “end the race to the bottom in corporate taxation and ensure fairness for the middle class and working people in the US around the world”.

UK Chancellor of the Exchequer Rishi Sunak, who hosted the summit, said the agreement would make the global tax system “fit for the global digital age”.

His German counterpart, Olaf Scholz, said it was “very good news for tax justice and solidarity and bad news for tax havens”.

“Companies will no longer be in a position to dodge their tax obligations by booking their profits in lowest-tax countries,” he said.

Source – https://www.bbc.co.uk/