Historic G7 Agreement to Reform the Global Tax System



The G7 finance ministers committed to a global minimum tax target for large companies of at least 15%, as reported on Saturday by the UK Finance Minister Rishi Sunak, which explained that the pact "seeks to build a balanced playing field for global companies", which also described the agreement as "historic".

The commitment of the seven states (United Kingdom, France, Germany, Italy, Japan, United States and Canada) for a global tax reform “adapted to the digital age”, as Sunak describes it, represents an important impetus for the G20 meeting to be held in Venice in July, where a formal agreement on the matter is expected.

The final text of the statement obtained by the AFP also mentions the commitment to a better distribution of the rights to tax the profits of large multinationals, mainly digital and American ones. It is the so-called second "pillar" of the reform proposed by the OECD and that includes about 140 countries. In other words, the rule also intends that companies pay in the countries where they sell their products and services and not where they declare their profits.

The debate on the imposition of this tax has been on the table of the main governments for several years, but it has not been until these last weeks that it has begun to accelerate. Yesterday the Second Vice President and Minister of Economic Affairs and Digital Transformation, Nadia calviño, along with their counterparts from Germany, France and Italy, representing the four largest economies in the euro zone, signed a letter to demand the universality of this tax.

In the letter, the main European economic representatives pointed out that "fiscal 'dumping' cannot be an option for Europe, nor for the rest of the world", while recalling that the "introduction of a fairer international tax system and efficient anda was a priority before the current economic crisis and it will be even more necessary to get out of it ».

In this way, despite the fact that the G7 does not have a formal role in the process of discussing the new international taxation, a pact within this group represents a powerful impulse to reach an agreement in the formal negotiations that are taking place. in this regard in the G20 and the OECD ahead of the July meeting in Venice.

The agreement was also signed by the President of the Government, Pedro Sanchez, who added on his Twitter account that the pact represents "progress towards a new tax system for the global digital era."

United States, satisfied

For its part, the United States, the main promoter of this tax, has also shown its satisfaction after the agreement reached: “This global minimum rate puts an end to the race to the bottom of corporate tax and guarantees justice for the middle class and workers from the United States and from all over the world ” US Secretary of the Treasury, Janet Yellen.

With the signing of the commitment, USA has lowered its aspirations on this minimum corporate tax globally, by reducing its initial claim from 21% to an effective rate of 15%.

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