France, Germany, Italy, Spain on verge of G7 deal to tax multinationals

Britain's Chancellor of the Exchequer Rishi Sunak left meets with Japanese Deputy Prime Minister and Finance Minister Taro

Britain's Chancellor of the Exchequer Rishi Sunak left meets with Japanese Deputy Prime Minister and Finance Minister Taro

Britain's finance ministry said Saturday morning's talks between the G7 finance ministers had been "productive".

The G7 also agreed to the principle of a global minimum corporation tax on large firms of at least 15pc operated on a country-by-country basis, a step Mr Sunak said would "create a more level playing field for United Kingdom firms and cracking down on tax avoidance".

G-7 finance ministers meeting in London also endorsed proposals to make the world's biggest companies - including US -based tech giants - pay taxes in countries where they have lots of sales but no physical headquarters.

The other international-tax agreement is about a practice known as digital taxation that members of the worldwide project have been talking about.

The G7 group of advanced economies has reached a "historic" deal on taxing multi-national companies, the UK's Chancellor of the Exchequer, Rishi Sunak says.

Part of the agreement is that countries such as France that have imposed digital services taxes would remove them in favor of the global agreement.

The endorsement from the G-7 could help build momentum for a deal in wider talks among more than 140 countries being held in Paris as well as a Group of 20 finance ministers meeting in Venice in July.

The deal - from the US, UK, France, Germany, Canada, Italy and Japan - will put pressure on other countries to follow suit, including at a meeting of the G20 next month.

The meeting of finance ministers came ahead of an annual summit of G-7 leaders scheduled for June 11-13 in Carbis Bay, Cornwall.

Labour lamented that the G7 did not push for a higher base rate after U.S. president Joe Biden had initially called for a 21% minimum, which the party estimated would have raised an additional £131 million for public services. The changes, if enacted, would have particular impact on the world's leading tech companies, such as Amazon and Google, which have long succeeded in avoiding taxation in numerous jurisdictions where they operate.

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"Before the crisis, it was hard to understand", a European source told AFP.

Britain said talks on tax policy had been productive but differences remained.

"It is increasingly clear that in a complex, global, digital economy, we can not continue to rely on a tax system that was largely designed in the 1920s. And I believe they have high expectations for what we all can agree over the coming days".

To ensure a balanced global economic recovery from virus-induced slumps and equitable COVID-19 vaccine access for developing nations, the advanced nations vowed to "take steps to limit the uneven impact of the crisis by targeting support to where it is needed most", and to encourage the pharmaceutical industry to contribute more.

The thorny topic of the regulation of digital currencies such as bitcoin will also be on the agenda.

U.S. Treasury Secretary Janet Yellen, on behalf of the White House, proposed a minimum global corporate tax rate of 15%, which is below the lowest rate of any of the G7 nations.

At the same time, Ireland has expressed "significant reservations" about Biden's plan.

Rich nations have struggled for years to agree a way to raise more tax from large multinationals such as Google, Amazon and Facebook, which often book profits in jurisdictions where they pay little or no tax.

"A rate of 15 percent would in our opinion be largely insufficient", Oxfam France's senior policy officer Quentin Parrinello said.

Britain wants multinationals to pay taxes that reflect their operations, as governments seek to fix finances battered by slashed tax receipts plus vast spending and borrowing during the pandemic.

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