The G7 finance ministers, which include Canada, the US, Japan, France, Germany, Italy and the UK, reached a “historic” agreement this Saturday to lay the foundations for the new international tax system through the introduction of a minimum tax rate VAT 15% universal for large companies.
The British Treasury Secretary Rishi Sunak has confirmed the pact of the ministers met in London and stated that he wants to create a balanced playing field for global companies.
“After years of debate, the G7 finance ministers have reached a historic agreement to reform the global tax system to adapt to the global digital age,” Sunak said, according to the BBC.
Global companies like Amazon, Google or Facebook will be hardest hit, as they can now legally tax their businesses that they generate in other countries in a country with favorable tax conditions. With this change, the rich countries are trying to avoid a “race to the bottom” in fiscal policy.
This regulation also stipulates that companies pay in the countries in which they sell their products and services, and not where they declare their profits.
The initiative is “to adapt to the global digital age, but above all to ensure that the right companies are paying the right taxes in the right places, and that is a huge win for UK taxpayers,” Sunak said.
The US Treasury Secretary has stressed that “this global minimum will put an end to the race for the bottom line of corporate tax and ensure justice for the middle class and workers in the United States and around the world.”
The meeting of the G7 finance ministers will be followed next week by the summit of the G7 heads of state and government, which will meet on June 11-13.
In this way, despite the fact that the G7 does not play a formal role in the discussion process on the new international taxation, a pact within this group would be a powerful impetus for reaching an agreement on this in the G20 and in the ongoing formal negotiations OECD.
With that in mind, the United States has slashed its global minimum corporate tax rate from 21% to an effective rate of 15% in order to broaden consensus on this issue.