G7 Finance Ministers are about to reach an agreement on global corporate tax

G7 Finance Ministers are about to reach an agreement on global corporate tax

The Finance Ministers’ Meeting of the World’s Leading Industrialized Countries (G7) has come close to an agreement on global corporate tax.

The G7 Finance Ministers, meeting in London, are expected to agree in principle to change the basis of international corporate tax law for the first time in a century. This historic plan aims to force the world’s largest corporations to pay more taxes in the countries where they do business, not just where they are headquartered.

Speaking to the BBC, German Finance Minister Olaf Scholz said he was “absolutely confident” that a deal would “really change the world”. Meanwhile, French Finance Minister Bruno Le Maire also said ministers were close to a “historic agreement” and the world would see the G7 remain a global force in determining the rules of the game. international order in the 21st century.

It is expected that the G7 Finance Ministers Meeting will issue a joint statement on June 5, stating the G7’s common stance as well as supporting the US administration’s call for a global tax regime for largest corporations in the world and minimal global tax rates.

Meanwhile, some sources close to the G7 now say that the G7 is pushing for negotiations on a global minimum tax of at least 15%. Bloomberg reports that a rate of at least 15% would be consistent with a proposal the US Treasury Department made last month.

It remains unclear whether a specific rate will be included in the G7 statement, Bloomberg said, while the draft statement reported by Reuters earlier this week did not mention a specific rate.

Since 2013, countries have been negotiating to find an agreement on international taxation. The G7 Finance Ministers Meeting took place in the context of the Group of 20 G20 economies and the Organization for Economic Cooperation and Development (OECD) conducting negotiations on international tax issues, including the global minimum tax. bridge. The G20 hopes to reach an agreement in July.

Difficulties were evident in the negotiation process, especially on taxing large US technology corporations. However, prospects for a deal have increased significantly after US President Joe Biden took office earlier this year and introduced new proposals. Currently, Washington considers an agreement on a global minimum tax as a way to end the “race to the bottom” on corporate taxes, and sees the agreement as a way to help US corporations remain competitive, if the US corporate tax increase.

To date, there has not been a universal minimum tax rate, and according to The Hill, such an agreement would encourage countries to establish mechanisms to ensure that corporations pay the minimum tax rate. with income from abroad.