The most developed economies on the planet, gathered at the G7, are close to reaching an agreement that establishes new pillars for international taxation, reduces competition between countries for offering tax advantages and forces digital giants to pay taxes where they obtain benefits.
If the United Kingdom, as host of the meeting of the G7 finance ministers this weekend in London, declared these days “optimistic“On a pact, the first statements of those responsible present at the meeting reinforced that impression.
“We are one millimeter away from a historic agreement”, French Finance Minister Bruno Le Maire, whose country has been one of the hardest-fighting for reform since the beginning of negotiations eight years ago, stressed to the BBC.
If the prospects are fulfilled, the G7 would agree on the so-called “two pillars” of the reform: on the one hand, a minimum tax rate would be set for multinationals, and on the other, rules would be imposed so that the giants of the digital economy pay for their profits in the countries where they obtain them, and not only where they are based physical.
Indeed, the United Kingdom is the country of the seven of the group that has shown the most reluctance to establish a common minimum tax for Business.
If the United States began by proposing a minimum rate of 21%, driven by President Joe Biden’s intention to raise it in his country, then lowered it to 15%, which for Paris would only be a “starting point”.
That percentage “is the most important issue and the greatest difficulty, and it is where right now the most is being negotiated,” he said. The mayor, who recalled that for his country it is necessary for the minimum rate to be “something credible and really effective”.
Similarly, he ruled out that some of the internet giants will be exempted from the call “digital rate”, since in his opinion “no one would understand that of these large companies that are making huge profits, some pay and others do not.”
Need for consensus
After the dark stage for multilateralism that the presidency of Donald Trump in the US represented, the G7 countries now agree that tax reform is not only a necessity for the expansive programs of post-pandemic recovery, it also embodies the return of the great global consensus.
“If we are able to reach an agreement today or tomorrow, it will mean that for the first time in many years the G7, the Western countries, we can agree on something for the 21st century“, reiterated the Mayor.
His British counterpart, Rishi Sunak, made it even clearer in his speech at the meeting: “Opportunities to make lasting reforms like this one they don’t come very often. “
“We cannot continue to rely on a tax system that was largely designed in the 1920s,” remarked the British minister, convinced that “opportunities to promote reforms like this do not appear very often.”
Technical discussions are held at the Organization for Economic Cooperation and Development (OECD), with more than 140 countries and jurisdictions involved. Decisions there are made by consensus, so theoretically either party could block the situation, but if the G7 were to reach an agreement, it would be a strong boost.
But it will also be essential to see what happens in the G20 (where emerging economies such as China, India or Brazil), which organizes a meeting of finance ministers on July 9 and 10 in Venice (Italy).
These days measures are also being debated in London to involve private companies in the fight against climate change.
The United Kingdom, which will host the next climate summit in autumn COP26, wants companies to participate in the goal of zero net emissions, for which it is studying forcing them to declare with transparency how their activities or investments affect the environment.
“The transition to zero emissions will be one of the economic events that will define the next decade and that will transform our future societies. We need to start the practical and tangible work to make it real. “Sunak told the G7 delegates.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.