G-7 Leaders. at the first face-to face meeting since Corona Virus
The world’s leading economies are on the brink of announcing a historic deal to tax the tech giants, the German finance minister has told Sky News.
Olaf Scholz said the plan to reform the taxation of tech companies and introduce a minimum level for business tax rates would “change the world”, bringing in billions of pounds in tax revenue which would otherwise have been shifted to low tax countries.
The comments came as ministers from the Group of Seven (G7) industrialised economies met in London for the first such face-to-face summit since the onset of COVID-19 over a year ago.
In part because of pressure from the Biden White House and US Treasury secretary Janet Yellen, the G7 ministers are understood to be on the brink of announcing an unprecedented set of reforms.
The plan would help combat profit shifting, where companies – including tech giants and multinational brands – can shift profits to low tax jurisdictions.
The deal entails two “pillars”: First, there will be special rules to change how much tax some large companies will pay, and where those taxes are paid.
Hitherto business taxes were based purely on company profits; in future a chunk of those taxes will be calculated based on sales.
The second pillar involves the creation of a global minimum corporate tax rate, designed to encourage countries not to cut their business tax rate below 15%.
Speaking on the fringes of the London meeting between the US, UK, Japanese, German, French, Italian and Canadian finance ministers, Mr Scholz said: “That we’ve made progress on both pillars is what we have worked on so hard.
“It looks as if we will now make it, and it will change the world.
“We’ve worked very hard in the last few years to make progress step by step, we discussed with many people and many experts on this question and with many other countries, but now we are at a stage where an agreement is feasible.
“This is a historic moment, and it will help us to do our job: to serve our people. It’s about fairness and justice.”
The deal entails two “pillars”: First, there will be special rules to change how much tax some large companies will pay, and where those taxes are paid.
Hitherto business taxes were based purely on company profits; in future a chunk of those taxes will be calculated based on sales.
The second pillar involves the creation of a global minimum corporate tax rate, designed to encourage countries not to cut their business tax rate below 15%.
Speaking on the fringes of the London meeting between the US, UK, Japanese, German, French, Italian and Canadian finance ministers, Mr Scholz said: “That we’ve made progress on both pillars is what we have worked on so hard.
“It looks as if we will now make it, and it will change the world.
“We’ve worked very hard in the last few years to make progress step by step, we discussed with many people and many experts on this question and with many other countries, but now we are at a stage
where an agreement is feasible.
“This is a historic moment, and it will help us to do our job: to serve our people. It’s about fairness and justice.” By Economics & data editor @EdConwaySky
