Sci-tech

G7 seals breakthrough deal to tax global companies

G7 seals breakthrough deal to tax global companies”

"That global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the USA and around the world", Yellen said. In a bid to try and stop the shifting of funds to tax-efficient countries, the G7 has agreed to take away some of the benefit gained from the revenue movements.

Finance ministers from the G7 countries meeting in the UK's capital rejected US President Joe Biden's call for a 21 percent global minimum business tax rate, settling on a far-lower figure of 15 percent.

Beyond the level itself, just as important for Britain and many others is that large multinationals pay more tax where they make their sales - not just where they book profits, or locate their headquarters.

G7 countries reached a landmark agreement Saturday aimed at making it harder for the world's largest companies to avoid paying taxes.

Yet major disagreements remain on both the minimum rate at which companies should be taxed, and on how the rules will be drawn up to ensure that very large firms with lower profit margins, such as Amazon, face higher taxes.

Momentum has grown behind the US-led plans to limit the ability of multinationals such as tech giants to game the tax system to boost profits, especially at a time when economies around the world are reeling from the impact of the coronavirus outbreak.

Nations also agree to follow United Kingdom lead in making climate reporting mandatory, and agree measures to crack down on the proceeds of environmental crimes.

Britain's Treasury chief Rishi Sunak, the meeting's host, said the worldwide taxation deal would "reform the global tax system to make it fit for the global digital age and crucially to make sure that it's fair, so that the right companies pay the right tax in the right places".

Official data showed Ireland's economy grew nearly eight percent in the first quarter, as multinational firms' revenues helped it continue to buck neighbours' pandemic downturns.

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Paschal Donohoe was among the world leaders who attended the G7 summit of finance ministers in London - as Ireland's multinational tax practices featured on worldwide front pages.

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.

Ministers from the US, Japan, France, Canada, Germany and Italy will attend the two-day meeting at Lancaster House in London, with Donohoe attending as President of the Eurogroup. "Today's agreement is a significant first step towards certainty for businesses and strengthening public confidence in the global tax system".

Ireland - a member of the European Union - has a corporate tax rate of 12.5 percent, for example.

Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates.

"But it has to happen but on an worldwide 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.

The Government has said it is ready to go it alone with a local digital tax if the G7 deal falls over.

Britain wants multinationals to pay taxes that reflect their operations, as nations across the world seek to fix virus-battered finances.



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