The G7 agreed on a global minimum tax of 15% for multinationals – Telam

Finance ministers from the G7 – which includes Canada, the United States, Japan, France, Germany, Italy and the United Kingdom – today agreed to lay the foundations for a new international tax regime, by setting up a 15% global minimum tax for large multinational corporations.

UK Finance Minister Rishi Sunak today confirmed the pact reached by ministers meeting in London, and explained that seeks to create a balanced playing field for global business.

In this sense, Sunak stressed that “after years of debate, the G7 finance ministers have reached a historic agreement for the reform of the global tax system to adapt to the global digital age“, as reported by the British channel BBC and reproduced DPA.

The initiative is “to adapt to the global digital age, but more importantly to ensure that the right companies pay the right taxes in the right places and that is a huge price for UK taxpayers,” Sunak said.

Thus, despite the fact that the G7 has no formal role in the process of discussing the new international taxation, a pact within this group would imply a a powerful impetus to reach agreement in the formal negotiations taking place on this issue at the G20 and the OECD.

President Joseph Biden’s proposal to sanction a 15% income tax for large corporations pursues the dual purpose of stop the flight of income to third countries and, on the other hand, finance infrastructure projects.

Biden’s initiative aims to set aside plans to raise corporate tax rates up to 28% and, instead, sanction a minimum tax rate of 15% aimed at ensuring that all companies pay taxes in the country, according to White House sources to international media. .

This project aims at a double negotiation. On the one hand, Biden wants the initiative, with a lower tax rate, to appeal to Republican lawmakers and allow approval of White House plans to fund its infrastructure projects.

On the other hand, the American president will seek the support of his peers from the Group of 7 during the next negotiations which will be held next week in London, from June 11 to 13.

In principle, the initiative raised at the G7 made it possible to unblock the negotiations for an extraordinary tax which had been at a standstill for a long time.

Extraordinary tax for the pandemic

At the same time, in Paris, as part of a call launched by the Organization for Economic Co-operation and Development (OECD), the application of an extraordinary tax to large companies to finance expenses related to the coronavirus pandemic.

The Biden proposal aims to end the race for companies to pay taxes in low-tax countries.

With this change, rich countries seek to avoid a “race to the bottom” of fiscal policies“

The tax negotiations in Paris focus on two pillars: one is a overall minimum to avoid that multinational companies use complex legal and accounting schemes to ttransfer of profits to low-tax countries where they do little or no business. The second is to find a way tax the companys, especially large tech companies that can make profits in countries where they have no physical presence and, therefore, they do not pay taxes.

Another of Biden’s goals is that G-7 countries unify the application of the tax avoid isolated initiatives like the one in France which already applies a digital tax on the profits of technology companies. Washington wants the tax to apply not just to tech but to any business, so it doesn’t just focus on digital.

With this tribute, Biden seeks to fund ambitious $ 1 trillion public works plan and at the same time curb the outflows of income which are remitted by large corporations to tax shelters with less taxation.

For the Democratic administration, the 15% rate would help deter tax evasion in the country because it would only apply to foreign income, as long as this income is not taxed abroad.

The ambitious plan Biden will be funded to the tune of approximately $ 700,000 million the reinforced application of existing taxes, $ 200 billion, to end a tax exemption on capital gains on large estates and other $ 75 billion from resources allocated to Covid-19 but not spent. The remainder would come from applying 15% to corporate profits.

Guzmn: enthusiastic, although I would have preferred a higher “minimum”

Economy Minister Martn Guzmn said today that the agreement reached by the G7 to establish a comprehensive minimum tax on large companies is “a positive step to tackle tax evasion by multinationals which undermines nation states and threatens the development of peoples ”.

Through the social network Twitter, and commenting on a tweet from the Tlam news agency, Guzmn celebrated the engagement of the G7, although he warned “beware: the minimum rate will probably also be the maximum rate. And 15% is very little”.

The G7 has agreed on a global minimum tax of 15% for multinationals, in which companies like Amazon, Google or Facebook will be the most affected.