Finance ministers of the G7 countries, meeting in London, have reached an agreement to commit to establishing a global tax of at least 15 percent for multinationals operating in those countries, regardless of where their headquarters are. Rishi Sunak, UK finance minister, spoke of it as a “historic agreement to reform the global tax system to adapt it to the global digital age”. Sunak explained that the tax would affect companies with profit margins above 10 percent.
The deal could particularly affect large tech companies like Amazon and Google, and could bring governments billions of dollars to support the large costs of the coronavirus pandemic. The G7 countries are the United States, the United Kingdom, France, Germany, Canada, Italy and Japan, and it now remains to be seen whether other countries will agree to do the same. The agreement could be extended to the G20 countries, which will meet in July in Italy, but according to the New York Times any extension of the agreement would not arrive before the next meeting, at the time scheduled for October.
The agreement is based on two principles: the first is to prevent states from engaging in a sort of “race to the bottom” on taxation to entice companies to work on their territory; the second provides that certain companies should be avoided – simplifying the question a bit – to pay taxes in certain countries in which they claim to have their profits, without however paying them at an adequate level where they sell their products or services. .
The agreement comes after years of intense negotiations and, among other things, could alleviate certain tensions that have existed in particular between Europe and the United States on this issue.