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'Historic' agreement at G7 Finances regarding minimum corporate tax

‘Historic’ agreement at G7 Finances regarding minimum corporate tax

G7 finance ministers on Saturday announced an “unprecedented” agreement on a global minimum tax and a better distribution of tax revenue from multinational companies, especially digital giants, after a two-day meeting in London.

The Group of Seven is committed to the goal of achieving a global corporate tax rate of “at least 15%,” according to its joint statement, which also mentions the commitment to equitable distribution of corporate rights. Countries.

Treasury Secretary Rishi Sunak, who chaired the meeting in his capacity as the host country of the Group of Seven industrialized nations, described the G7 agreement as “historic”.

The United Kingdom, France, Italy, Canada, Japan, Germany and the United States, encouraged by the American shift on the tax issue since Joe Biden came to power, want to achieve an ambitious reform in the spirit of the work done within the OECD. .

This targets big tech companies, often American, that pay high taxes despite huge profits, by localizing in countries where the corporate tax rate is very low, if not zero.

Targeted with reform, the US social networking giant Facebook has asserted that it wants its “success”, even if it means that it is “paying more taxes and in different places”, responded on Twitter public affairs director Nick Clegg.

US Treasury Secretary Janet Yellen hailed an “unprecedented commitment” from the G7 finance ministers.

End of the race to the bottom

“This global minimum tax will put an end to the race for the lowest tax,” she said.

European Commission President Ursula von der Leyen welcomed on Twitter a “major step towards fair taxation and competition”, calling for more “international cooperation”.

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The G7 countries want to put an end to tax competition that has led to a sharp decline in corporate tax revenue since the mid-1980s. On the contrary, digital giants are making huge profits أرباح

If the reform project is unanimously welcomed, the proposed rate level is discussed.

French Finance Minister Bruno Le Maire responded: “It is a starting point and in the coming months we will fight for this tax rate to be as high as possible.”

For Gabriella Bucher, of the NGO Oxfam, the minimum rate of 15% is “too low” if we are to fight “recourse to tax havens”.

The ATAC Association estimates that “the expected benefit from this measure is marginal in the short term” and that a rate of 25% “would have constituted significant progress.”

On the contrary, for a country like Ireland, which has made the low corporate tax rate (12.5%) a comparative advantage, it is too high.

Long trip

Several countries including France, the United Kingdom, Italy and Spain have already implemented their own digital tax in the meantime, and discussions with the United States have also focused on the timetable for withdrawing these national measures in favor of international reform.

Rishi Sunak admits that “we still have to go to the G20 and find an agreement with a larger group of countries, so it is difficult to say when we will reach a final agreement.”

“There is still much work to be done. But this decision gives an important impetus to the upcoming discussions among the 139 member countries of the OECD Comprehensive Framework. […] “As we continue to seek an agreement that ensures that multinational companies pay their fair share of taxes,” the new OECD Secretary-General, Matthias Kormann, said in a statement.

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According to a source close to the negotiations, the challenge during the next G-20 will also be to convince a superpower like China.

There are a few countries that have concerns. Ireland and China are two examples of this,” Janet Yellen admitted at a press conference in London.

But she advocates a “stabilizing” reform in the face of efforts by several countries to target big companies, especially digital giants.

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