Hopes for ‘historic’ global corporate tax deal as G7 meets

Momentum is building for a minimum level of corporate tax to prevent multinationals like tech giants from playing the system to boost profits. 
Finance ministers from wealthy G7 nations on Friday moved towards supporting US-backed plans for a minimum global level of corporate tax aimed at getting multinationals — especially tech giants — to pay more into government coffers hit hard by the pandemic.

British finance minister Rishi Sunak on Friday chaired the first of two days of meetings, held in person after an easing of Covid restrictions and attended by counterparts from Canada, France, Germany, Italy, Japan and the United States.

US President Joe Biden is set to attend on his first foreign tour since taking office in January.

Corporate tax is one of two pillars in efforts for global fiscal reform, the other being a “digital tax” to allow countries to tax the profits of multinationals headquartered overseas.

“And I would just say this: The world has noticed. And I believe they have high expectations for what we all can agree over the coming days.”

It will also “give considerable momentum to the G20”, scheduled to hold a finance meeting in July, he said.

Ministers also plan to commit to “sustain policy support”, or stimulus, for “as long as necessary” to nurture economic recovery, while addressing climate change and inequalities in society, according to the document.

The thorny topic of the regulation of digital currencies such as bitcoin will also be on the agenda.

Biden has called for a unified minimum corporate tax rate of 15 percent in negotiations with the Organisation for Economic Co-operation and Development (OECD) and G20.

A deal on a minimum corporate tax rate is “within sight”, finance ministers from France, Germany, Italy and non-G7 member Spain declared Friday.

“For more than four years, France, Germany, Italy and Spain have been working together to create an international tax system fit for the 21st century,” added the four ministers.

France’s Le Maire told journalists in London that Biden’s proposed 15 percent is “a minimum, for us it’s a starting point”.

Ireland has expressed “significant reservations” about Biden’s plan, however. Its 12.5-percent tax rate is one of the lowest in the world, prompting tech giants such as Facebook and Google to make Ireland the home of their European operations.

“A rate of 15 percent would in our opinion be largely insufficient,” Oxfam France’s senior policy officer Quentin Parrinello told AFP.

– ‘Race to bottom’ –

They say that a so-called “race to the bottom” saps precious revenues that could go to government priorities like hospitals and schools.

The proposals come at a time when governments worldwide have suffered massive falls in tax receipts during Covid lockdowns, while at the same time having to borrow vast sums to prop up their countries’ economies.

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