Finance ministers from the world’s seven richest nations agreed to set a minimum 15% tax on multinational tech companies in the hope that other countries will follow suit.
UK Chancellor of the Exchequer, or Finance Minister, Rishi Sunak, announced on Saturday that the move would ensure that the wealthiest companies “pay their fair share.”
The G7 finance ministers agreed to commit to a global corporate tax rate of at least 15% “which is operated on a country-by-country basis,” Sunak added.
They also said that the largest and most profitable multinationals will have to pay taxes in the countries where they operate and not just where they are based.
It comes as finance ministers met before the G7 in the UK, which will take place on June 11-13.
“Our intensive efforts over the past three years are paying off. The seven major industrial nations have today supported the concept of a minimum tax for businesses,” German Finance Minister Olaf Scholz tweeted.
“This is very good news for tax justice and solidarity, and bad news for tax havens around the world.”
French Finance Minister Bruno Le Maire said the 15% corporate tax was a minimum and that the government would “fight” to make sure the tax was “as high as possible.” But he also called the measure “historic.”
Nick Clegg, Facebook’s vice president of global affairs, tweeted: “We want the international tax reform process to succeed and we recognize that this could mean Facebook paying more taxes and in different places.”
But critics said the corporate rate was too low.
“It is absurd for the G7 to claim that it is ‘overhauling’ a broken global tax system by setting a global minimum corporate tax rate that is similar to the soft rates charged by tax havens like Ireland, Switzerland and Singapore. They are setting the bar so low that companies can bypass it, “said Gabriela Bucher, executive director of Oxfam International, in a statement.
US support for a global corporate tax had helped the initiative gain momentum.
The country’s Secretary of the Treasury, Janet Yellen, said that “the global minimum tax would end the race to the bottom in corporate taxes and guarantee fairness for the middle class and workers in the United States and around the world.”
Days ago, economist Joseph Stiglitz asked EU countries to support President Joe Biden’s call for a global corporate tax of 21%.
Stiglitz wrote in a Financial times editorial that it was not too late for European countries to commit to a more ambitious global corporate tax, emphasizing that revenues from such a tax were needed as countries emerge from the COVID-19 pandemic.
Many also hope that the global tax effort will be embraced by the larger Group of 20. The finance ministers will meet in Venice in July.
In a statement released on Saturday, the G7 finance ministers also encouraged members, which include Germany, Canada, France, the United States, Italy, Japan and the United Kingdom, to contribute more funds to the World Organization of the Salud and Gavi’s COVAX scheme to reduce vaccines. income countries.
George is Digismak’s reported cum editor with 13 years of experience in Journalism