G7 reach record agreement on taxing large multinational corporations

On Saturday, the G7 nations made a historic agreement to tackle cross-border tax loopholes exploited by some of the world’s largest corporations.

The G7 said that it will support a worldwide corporate tax rate of at least 15%, as well as steps to guarantee that taxes are paid in the countries where corporations operate.

G7 finance ministers have secured an unprecedented agreement to restructure the worldwide tax system to make it suitable for the global digital era, according to Rishi Sunak, Britain’s finance minister.

The agreement, which might provide the foundation for a worldwide agreement next month, aims to put an end to a decades-long race to the bottom in which governments fought for corporate giants’ business by offering ultra-low tax rates and exemptions.

This has cost their governments hundreds of billions of dollars, a loss they now need to make up as soon as possible to cover the enormous cost of rescuing economies devastated by the coronavirus catastrophe.

For the first time since the onset of the COVID-19 epidemic, ministers convened in person in London. The G7 ministers said they would commit to a global minimum tax of at least 15% on a country-by-country basis, according to a copy of the final agreement obtained by Reuters.

They would pledge to a fair distribution of taxation rights, with market nations receiving taxation rights on at least 20% of profits above a 10% margin for the largest and most lucrative multinational corporations, according to the G7 document.

The ministers also agreed to take steps toward requiring corporations to report their environmental effect in a more uniform manner so that investors may more readily determine whether or not to support them, which is a major priority for the UK.

President Joe Biden’s administration injected new life into the stalled discussions by suggesting a minimum worldwide company tax rate of 15%, which is higher than the rate in Ireland but lower than the lowest in the G7.

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