september 23, 2021

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G-7 countries reach historic agreement on world tax reform

British President Rishi Sunak (from left), US Treasury Secretary Janet Yellen, International Monetary Fund Managing Director Kristalina Georgieva and Canadian Finance Minister Christiaan Freeland chat on the first day of the Seven Finance Ministers’ Group meeting at Lancaster House in London on June 4, 2021.

Stephen Rousseau | AFP | Getty Images

LONDON – Finance ministers of the most advanced economies, known as the Group of Seven, have backed the US proposal, which calls for companies around the world to pay at least 15% tax on income.

“G-7 finance ministers, after years of discussions, have reached a historic agreement to reform the global tax system and adapt it to the global digital age – and more importantly to ensure that the right companies pay the right taxes in the right places,” UK Finance Minister Rishi Sunak said in a video on Saturday. Announced in the statement.

Under the agreement, Sunak said in a series of tweets that the G-7 countries would support at least 15% of the global minimum corporate tax. These reforms will affect the world’s largest companies with a profit margin of at least 10%.

If finalized, it would signify significant growth in global taxation. G-7 members include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States

U.S. Treasury Secretary Janet Yellen, Who was in London for a face-to-face meeting, praised the move as significant and unprecedented.

“That global minimum tax will end up below and below corporate taxation, and will ensure justice for the middle class and working people in the United States and around the world,” he tweeted.

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President Joe Biden In an effort to end a race between different countries in attracting international businesses, his administration initially recommended a minimum global tax rate of 21%. However, after fierce negotiations, a compromise was reached to set it at 15%.

A global agreement in this area would be good news for cashless countries who are then trying to rebuild their economies. Corona virus Crisis.

But Biden’s idea was not received with the same level of enthusiasm around the world. The UK, for example, did not immediately support the plan.

US President Joe Biden speaks during a meeting with members of both parties in Congress.

Pool | Getty Images News | Getty Images

This issue may be controversial European union Similarly, different member states charge different corporate tax rates and in doing so can attract big name companies. For example, the tax rate in Ireland may be as high as 12.5% ​​and in France as high as 31%.

Speaking in April, Irish Finance Minister Basel Donohue said small countries should be allowed to have lower tax rates because large economies do not have the same capacity for their size, according to the UK’s Guardian newspaper.

The world’s most powerful economies have been at odds over taxation for some time, especially in the wake of plans to impose higher taxes on digital giants. Under President Donald Trump, the United States has vehemently opposed digital tax initiatives in various countries and threatened to impose trade tariffs.