The Group of Seven rich nations secured a landmark deal that could help countries collect more taxes from big companies and enable governments to impose levies on U.S. tech giants such as Amazon.com Inc. and Facebook Inc.
The agreement by the G-7 finance ministers in Landon satisfies a U.S. demand for a minimum corporate tax rate of “at least 15%” on foreign earnings and paves the way for levies on multinationals in countries where they make money, instead of just where they are headquartered.
The deal aims to modernise the century-old international tax code and cools transatlantic tensions that threatened to spill into a trade war under Donald Trump. But key details are still to be nailed down, more nations must sign on, and full implementation could take years.
U.S. Treasury Secretary Janet Yellen, among the finance chiefs who hailed the announcement as an unprecedented step, said a final accord on which companies could see their profits taxed outside their home countries would include the likes of Amazon and Facebook.
What you are seeing is a revival of multilateralism, a willingness of leading nations in the G-7 and G-20, to corporate to address the most critical challenges facing the global economies,” Yellen said after the meeting.
The focus will now shift to a July meeting of the Group of 20 finance ministers in Italy and long-running talks between about 140 countries at the Organization for Economic Corporation and Development.
Today’s agreement is a significant first step toward certainly for businesses and strengthening public confidence in the global tax system. “Facebook’s Global Affairs Vice President Nick Clegg said on Twitter.
An Amazon Spokesperson said the CEO-led process “will help bring stability to the international tax system” and described Saturday’s deal as a “welcome step forward in the effort to achieve this goal.”
According to the communiqué after the London meeting, countries where big firms operate would get the right to tax “at least 20%” of profits exceeding a 10% margin. That would apply to “the largest and most profitable multinational enterprises,” potentially enabling the G-& to square the circle so that digital is included without being targeted.
The ministers of the U.K. and France both said they were now assured that tech giants would be in the cross-hairs of new rules, even as the final quantitative criteria are still to be determined.
We’ve been fighting for four years in all European and international forums, here at the G-7 and the G-20 for fair taxation of digital giants for a minimum corporate tax”, France’s Finance Minister Bruno Le Maire said.