A group of the world’s richest nations reached a landmark deal on Saturday (June 5) to close cross-border tax loopholes used by some of the world’s biggest companies.
Finance ministers from the world’s seven wealthiest nations met face-to-face in London for the first time since the start of the COVID-19 pandemic have agreed to set a minimum of 15% tax on multinational tech companies in the hope that other countries will follow suit.
It comes as finance ministers met ahead of the G7 in the United Kingdom, set to take place from 11-13 June.
They also said the largest and most profitable multinationals will be required to pay tax in countries where they operate and not just where they have their headquarters.
But critics said the corporate rate was far too low.
In a communiqué released on Saturday G7 finance ministers also encouraged members, which include Germany, Canada, France, the United States, Italy, Japan and the UK, to contribute more funds to the World Health Organization and Gavi’s COVAX scheme to get vaccines to lower income countries.
Rich nations have struggled for years to agree on a way to raise more revenue from large multinationals such as Google, Amazon and Facebook, which often book profits in jurisdictions where they pay little or no tax.
Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional home countries.
The global minimum tax rate would apply to overseas profits.
(Inputs various sources)
