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Following crunch talks at Lancaster House today, ministers from the world’s seven biggest economies announced the minimum level of corporate tax in a landmark move aimed at getting multinationals — especially tech giants to pay more into COVID-19 pandemic-hit government coffers. US President Joe Biden initially proposed a minimum global rate of 21 percent which is expected to raise more than $500bn for public services worldwide as multinationals are forced to pay higher tax rates.
Mr Sunak added: “These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer – creating a fairer tax system fit for the 21st century.
This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”
In a communique from G7 finance ministers, the seven nations said they were committed to “reaching an equitable solution on the allocation of taxing rights” with market countries awarded taxing rights on at least 20 percent of profit exceeding a 10 percent margin for the largest and most profitable multinational enterprises.
They added: “We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies.”
Mr Sunak was chairing the London meetings, held in person after an easing of COVID-19 restrictions and attended by counterparts from Canada, France, Germany, Italy, Japan and the United States.
Under the plans, the global minimum tax would be levied only on the world’s 100 largest and most profitable companies.
If a company pays taxes somewhere with a lower rate, it would probably have to pay top-up taxes.
Such a deal aims to end what US Treasury Secretary Janet Yellen has called a “30-year race to the bottom on corporate tax rates” as countries compete to lure multinationals.
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