G7

After 4 years G7 agree to tax multinationals 

Has the right time come due to Covid-19?

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Finance ministers from the G7 group of advanced economies on Saturday (June 5) reached a “historic” deal to make multinational companies pay more tax.

“We … commit to a global minimum tax of at least 15 percent on a country by country basis,” the G7 said in a statement at the conclusion of their London meeting.

“I am delighted to announce that today after years of discussion G7 finance ministers have reached a historic agreement to reform the global tax system,” said UK’s Finance Minister Rishi Sunak, who
who hosted the summit in the British capital. “It’s complicated and this is a first step,” he added.

His German counterpart, Olaf Scholz, said in a statement it was “very good news for tax justice and solidarity and bad news for tax havens”.

“Companies will no longer be in a position to dodge their tax obligations by booking their profits in lowest-tax countries.”

French Finance Minister Bruno Le Maire tweeted: “We made it! After 4 years of battle, a historic accord was reached with G7 member states.” “France can be proud!”

US Treasury Secretary Janet Yellen told reporters that the “historic” agreement on a global minimum tax would “help the global economy thrive, by leveling the playing field for businesses and encouraging countries to compete on positive bases.”

For decades, multinational corporations have abused gaps in an international tax system, that has barely changed since agreements made at the League of Nations in the 1920s.

Now a global minimum rate of corporation tax has been agreed, alongside measures forcing
huge tech corporations like Amazon and Facebook to pay more tax in the markets where they make their money regardless of physical presence.

The deal could see billions of dollars flow to governments to pay off debts incurred during the Covid crisis and not only. But “creative” accountants could just find new ones to exploit.

Oxfam slammed the deal as inadequate.

“It’s absurd for the G7 to claim it is ‘overhauling a broken global tax system’ by setting up a global minimum corporate tax rate that is similar to the soft rates charged by tax havens like Ireland, Switzerland and Singapore. They are setting the bar so low that companies can just step over it,” Oxfam said.

Is just 15% enough? As Oxfam says, it is not.

The G7 (Group of Seven) is an organisation made up of the world’s seven largest so-called advanced economies. They are Canada, France, Germany, Italy, Japan, the UK and the United States.

With reporting by BBC, The Guardian