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G7 Nations Agree To 15% Minimum Corporate Tax
The Group of Seven (G7 Nations) democracies agreed Saturday to support a global minimum corporate tax of at least 15%. This aims to deter multinational companies from avoiding taxes by registering in countries with lower tax rates and declaring profits there.
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G7 Nations Finance Ministers Meeting
During the recent G7 Nations finance ministers meeting in London last week, also endorsed additional tax proposals. This includes making large companies, including US tech giants, pay taxes in countries where they have no offices but make sales.
G-7 finance ministers meeting in London also endorsed proposals to make the world's biggest companies — including U.S.-based tech giants — pay taxes in countries where they have lots of sales but no physical headquarters.
US Treasury Secretary Janet Yellen
US Treasury Secretary Janet Yellen, the primary US delegate, hailed the agreement. She said that the G7 nations’ agreement “provides tremendous momentum” towards reaching a global deal.
This can help end “the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the US and around the world.”
In a press conference on Saturday from London, she said members of the G-7 agreed “the post-pandemic world must be fairer, especially with regard to global taxation. I think we will end up with a tax system that is much fairer,” Yellen added.
In particular, Yellen said that the details remain a work in progress. Afterward, the proposal will go through the larger Group of 20 for approval. In addition, Yellen said she believes they’ll reach a preliminary agreement with the larger group by July.
International Discussions
The tax issue discussions gained movement earlier this year when President Joe Biden backed proposals for a global minimum tax of 15% on corporate profits.
“The G-7 finance ministers have made a significant, unprecedented commitment today that provides tremendous momentum towards achieving a robust global minimum tax at a rate of at least 15%,” Yellen added.
For the next step involving the Group of 20, it won’t be as easy to get consensus. The measure will need support from leading economies outside of G7 nations like China and India.
It will also need the okay of 135 other countries. These nations are part of the Inclusive Framework that joined the negotiating table. Treasury chiefs from the G20 will meet in Venice on July 9-10.
Cooperation Needed
For the measure to succeed, countries that traditionally offer lower taxes below 15% must agree. Ireland is among the prominent of these countries and boasts a 12.5% corporate tax rate.
As a result, the country is home to a number of pharmaceutical and big tech companies. This early, Ireland already declared they prefer to keep their rates intact. “Any agreement will have to meet the needs of small and large countries, developed and developing,” Irish Finance Minister Paschal Donohoe wrote in a tweet Saturday.
Meanwhile, the US Congress can potentially gum up the works. Countries with parliamentary systems can perform better and turn the measure into a law immediately.
For the US, however, a razor-thin Democratic majority is vulnerable to Republican obstruction efforts. As long as the US remains immobile on the tax measures, other countries may delay their implementation as well.
Watch the Reuters news video reporting that G7 nations agree to tax big firms and squeeze havens:
Loading ...Do you agree that large companies should pay uniform tax regardless of headquarters location? Also, do you think large corporations will accept these proposals hands down?
Let us know what you think about companies’ practice of paying the lowest tax rates. Share your comments below.
12 Comments
7 ountries leaves the door open for them to register anywhere else.Unless EVERY COUNTRY AGREES *they will not) then these large corporation Googl,AMazon,Facebook,Twitter,PAYPAL,and all the rest will find the last small country making it the richest country in the world.
One thing we all need to understand is that although those dealing in products may pay minimal taxes they hire a lot of people.Those who would den the right to free speech should be fined up the azzores and then broken up into smaller businesses.
The power to tax is the power to destroy. These countries agree on a world wide tax on business then who’s next. This stinks. I do not want the UN or some other world wide government to dictate my taxes. Talk about total control of one’s life.
How do you think BIG companies get to be big companies
I’m sorry but this seems to smell of one world order. The US doesn’t need any country’s help and we damn sure don’t want them meddling in our laws of any kind. Next the would start on personal income taxes.
One small economics lesson. Corporations do not pay taxes. They collect tax money for the government. Let me explain. Taxes are a cost of doing business. It is a factor in determining price just like any other expense (labor, materials, utilities). If you raise the cost of doing business, the company raises the price to the consumer.
It’ll do absolutely no good, unless the Cayman Islands and such are in agreement. This is all just for show, these governments are employees of the Billionaires and will never act against their true interest.
One world order! That’s all they want and nothing else!
Employees and consumers pay all the taxes.
The so-called corporate tax is the world’s biggest scam. Corporations have no money that they don’t get from their customers (or ridiculous bailouts from governments), so every penny od “corporate tax” is paid by the average consumer. What a farce!
Hey MORONS The government doesn’t need any more money AND Corporations DO NOT PAY TAXES!!! END USERS DO! So U are causing inflation by trying to “soak the rich”. Wake the “F” up! This ain’t rocket science. No government lowers tax rates they spread them out to make them more palatable to a broader base. Government does not care about u, u are just a financial/revenue stream.
Taxes in America are determined by our elected congress only. Since it is always the citizens who ultimately pay, it is taxation without representation if accomplished any other way.
Paying the lowest tax rates is just good management, and taxing corporations is assinine because its just a hidden tax on consumers since businesses pass on costs to their customers. Corporate taxes should be 0, which would reduce consumer prices and add jobs to the economy.
Why are most the commentators on the discussion board much more intelligent than the people running the country?