The G7 supports Biden’s plan to reform the global tax system

London (CNN) – The finance ministers gave their approval on Saturday at the Seven Group (G7) meeting in London World minimum tax At least 15% for multinationals. The G7 acknowledges that large companies must pay taxes where they make sales and that they are not a place of normal existence.

The deal was announced by UK Finance Minister Rishi Sunak via video Posted on Twitter This Saturday, the G7 finance ministers of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States “reached a historic agreement” to ensure that the global digital age and, most importantly, the right companies pay the right taxes in the right places. ‘

The deal was made during a meeting of G7 finance ministers in London, which was attended by US Treasury Secretary Janet Yellen, who called for support for the administration’s efforts to rewrite international finance rules and encourage U.S. companies to publish profits abroad.

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Yellen said on Saturday that the deal was a “significant and unprecedented commitment” to the world’s richest economies, aimed at preventing companies from evading taxes by diverting their profits overseas.

“G7 finance ministers today have made a significant and unprecedented commitment, which will give them tremendous momentum to achieve a strong global minimum tax rate of at least 15%,” Yellen wrote in the statement.

“The global minimum tax will end the bottom line in corporate taxes and ensure justice for the middle class and working people in the United States and around the world,” he said. He said the tax would “equalize the sports sector for business and encourage countries to compete on positive foundations such as training and coaching our staff and investing in research and development and infrastructure.”

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Technology legends like Apple, Facebook Y Google May be affected by the contract. Foreign governments have long complained that large digital companies pay higher taxes. Some have recently passed taxes specifically targeting revenue from US-based companies including Facebook, Google and Amazon.

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Nick Clegg, Facebook’s vice president for global affairs, said in a statement that the company “has long called for global tax reform.” “We welcome the significant improvements in the G7,” he added.

“We want the international tax reform process to be successful, which means we realize that Facebook is paying more taxes and different places,” Clegg added.

Google has said it strongly supports efforts to revise international tax rules. The company hopes that “countries will continue to work together to ensure that a balanced and lasting agreement is finalized soon,” Google spokesman Jose Costasida said in a statement to CNN.

An Amazon spokesman said: “The OECD-led process creates a multilateral solution that we believe will help bring stability to the international tax system. The G7 agreement marks a positive step in the effort to achieve this goal. We look forward to continuing the discussions.

U.S. Treasury Secretary Janet Yellen speaks at a press conference after attending a meeting with G7 finance ministers in London, England on June 5, 2021. Credit: Justin Talis – WPA Pool / Getty Images

Forming a consensus

The deal marks a significant victory for the Biden administration ahead of next week’s G7 summit in Cornwall, demonstrating its initial ability to build consensus within the group.

Led by Yellen, the United States had been pushing hard for such an agreement before the G7. Although it is separate from the 15% U.S. corporate minimum tax proposed by Biden as part of the current infrastructure negotiations, officials see it as an integral part of their broader tax agenda.

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Biden’s plan to pay at least $ 4 1.4 billion in new infrastructure costs largely depends on getting support. World minimum tax Increase payments to companies treasury.

Setting a minimum rate will help prevent companies from transferring their profits to lower tax-paying countries.

This Saturday’s agreement will help speed up parallel tax negotiations between the 140 countries led by the Organization for Economic Co-operation and Development (OECD).

OECD Secretary-General Matthias Gorman welcomed the announcement on Saturday, saying it was “a historic step towards a global consensus needed to reform the international tax system.” He added in the statement that the decision added “significant impetus” to the upcoming parallel tax talks.

Ireland, a country that has successfully recruited international companies – including major US technology companies – by offering a corporate tax rate of just 12.5%, has expressed significant reservations about Biden’s proposal.

Esmond Harmon

"Entrepreneur. Social media advocate. Amateur travel guru. Freelance introvert. Thinker."

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