(AP) — The Group of Seven wealthy democracies agreed Saturday to support a global minimum corporate tax rate of at least 15% to discourage multinational corporations from avoiding taxes by stashing profits in low-tax countries.
G-7 finance ministers meeting in London also backed proposals to make the world's largest corporations, including U.S.-based tech
behemoths, pay tax in countries where they have significant sales but no physical
The meeting's host, Britain's Treasury chief Rishi Sunak, said the agreement would "reform the global tax system to make it fit for the global digital age, and crucially, to ensure that it is fair, so that the right companies pay the right tax in the right places."
U.S. Treasury Secretary Janet Yellen
, who attended the London meetings, stated that the agreement “provides tremendous momentum” toward reaching a global agreement that “would end the race to the bottom in corporate taxation, and ensure fairness for the middle class and working people
in the United States
and around the world.”
The finance ministers' meeting came ahead of the G-7 leaders' annual summit, which is set for June 11-13 in Carbis Bay, Cornwall, with the United Kingdom
hosting both events due to its rotating presidency of the group.
The G-7's approval could help build momentum for a deal
in larger talks involving more than 140 countries in Paris, as well as a meeting of the Group of 20 finance ministers in Venice in July.
The G-7 has also been under pressure to provide vaccines
for low-income countries dealing with new COVID-19
outbreaks and to fund climate change
projects. Saturday's statement said only that the members welcomed increased funding commitments from member countries and hoped for more.
After US President Joe Biden
supported the idea of a global minimum of at least 15% on corporate profits, international discussions on the issue gained traction.
The G-7 statement echoes a U.S. proposal to simply let countries tax a portion of the earnings of the largest and most profitable companies — digital or not — if they have a physical presence.
Part of the agreement states that countries that have imposed unilateral digital services taxes, such as France
, will abandon those unilateral taxes in favor of the global agreement, which the United States considers to be unfair trade measures that target large U.S. tech companies like Google, Amazon
, and Facebook
The proposal also calls for countries to tax their home companies' overseas profits at a rate of at least 15%, which would discourage the use of accounting schemes to shift profits to a few low-tax countries.
Nations have been debating how to deter companies from legally avoiding paying taxes by using tax havens — typically small countries that entice companies with low or zero taxes, even if the firms do little actual business
From Frankfurt, Germany
, McHugh contributed.