LONDON. The G7 finance ministers have reached an agreement to commit to introducing, country by country, a minimum global taxation of at least 15%. UK Finance Minister Rishi Sunak explains that the agreement provides for a minimum rate of “at least 15%” in each country, with reference to mega companies with margins above 10%.
According to the British minister, 20% of profits above this 10% margin will be reallocated to the countries where sales are made. Sunak added that the need for national taxes on digital services will disappear once the global solution is in place. “After years of discussions, the G7 finance ministers have reached a historic agreement to reform the global tax system to adapt it to the global digital age,” he told reporters. “We are committed – reads the final statement – to reach an equitable solution on the assignment of taxation rights”. And again: “We will ensure adequate coordination between the application of the new international tax rules and the elimination of all taxes on digital services, and other relevant similar measures, on all companies”.
The G7 financial agreement “will put an end to the race to the bottom between countries on taxation and will ensure equity for the middle class and workers in the US and elsewhere,” said US Treasury Secretary Janet Yellen with a tweet. The global minimum tax on multinationals “will also help the global economy thrive by ensuring competition and encouraging countries to compete on a positive basis.”
German Finance Minister Olaf Scholz hailed the G7’s “historic” minimum corporate tax agreement, saying companies will no longer be able to evade taxes by making profits in low-tax countries. Furthermore, the next step for Scholz will be to discuss the G7 agreement with a broader set of partners from the Organization for Economic Co-operation and Development and the G20.