Rich nations 'near deal' on corporate tax pact

Marco Green
June 5, 2021

Worldwide discussions on the tax issue gained momentum after U.S. President Joe Biden backed the idea of a global minimum of at least 15% on corporate profits.

But they agreed to re-jig how tax is charged, moving to a system based on twin "pillars" of profits and sales, rather than profit alone.

"But it has to happen but on an global level, not to be unfair to Ireland or single us out or any other small trade country because trade and jobs are essential to us here and I think our tax system is sound and it is fair", he said.

Due to COVID restrictions, ministerial delegations have been cut down and there are fewer traveling journalists.

"The commitment to a minimum effective tax rate of at least 15 percent is a promising start".

Under the deal, reached during a G7 finance ministers meeting in London, members agreed to set a minimum 15 percent global corporate tax threshold, a step they say will force companies to pay taxes in the countries where they generate their business, instead of siphoning profits offshore to tax havens.

Le Maire said a deal would send an important signal that the G7 - consisting of the United States, Japan, Germany, Britain, France, Italy and Canada - could still be influential.

The Treasury said the G7 finance ministers had signed up to "an ambitious two-pillar global solution to tackle the tax challenges arising from an increasingly globalised and digital global economy".

German Finance Minister Olaf Scholz said he was "absolutely confident" that there would be an agreement by the time the meeting finishes on Saturday.

Shadow chancellor Rachel Reeves said: "This Government must now show leadership, push for a 21% rate in negotiations, and use the money to fund our schools and our NHS".

The talks were preparing the ground for a broader summit of G7 leaders in Cornwall, England, starting on June 11, which will include US President Joe Biden on his first foreign tour since taking office in January.

Rich nations have struggled for years to agree a way to raise more revenue from large multinationals such as Google, Amazon and Facebook, which often book profits in jurisdictions where they pay little or no tax.

The United States is also holding out for an immediate end to the digital services taxes levied by Britain, France and Italy, which it views as unfairly targeting USA tech giants for tax practices that European companies also use.

British, Italian and Spanish fashion, cosmetics and luxury goods exports to the United States will be among those facing new 25% tariffs later this year if there is no compromise.

Changes will also be made to ensure major corporations, especially those with a strong online presence, will pay taxes in the countries where they operate and not only where they have headquarters.

Britain, Germany and France are open to this approach but want to ensure companies such as Amazon - which has lower profit margins than other tech firms - do not escape the net.

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