Business tax deal tops G7 finance meeting agenda

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According to a draft press release consulted by AFP, the chief financial officers and central bankers of the seven richest nations in the world will express “strong support” and a “high level of ambition” for a global minimum tax on companies.

FILE: UK Finance Minister Rishi Sunak will host the conference along with his counterparts from Canada, France, Germany, Italy, Japan and the United States. Photo: AFP

LONDON – Group of Seven finance ministers are expected to start talks on Friday, highlighting ambitious plans for a global minimum level of corporate tax.

UK Finance Minister Rishi Sunak to host the meeting – to be held in person following an easing of COVID restrictions – with his counterparts from Canada, France, Germany, Italy, Japan and the United States .

The talks will set the stage for a larger summit of G7 leaders in Cornwall, southwest England, from June 11, which will be attended by US President Joe Biden on his first overseas tour since he took up his post in January.

According to a draft press release consulted by AFP, the chief financial officers and central bankers of the seven richest nations in the world will express “strong support” and a “high level of ambition” for a global minimum tax on companies.

They then hope to reach a broader agreement at a G20 finance meeting scheduled for July.

The ministers also plan to pledge to “maintain political support” or the stimulus, “as long as necessary” to foster economic recovery, while tackling climate change and inequalities in society, according to the document.

In addition, they will urge “equitable, safe and affordable access to COVID-19 vaccines” everywhere in order to fully overcome the deadly pandemic.

And the thorny topic of regulating digital currencies like bitcoin will also be on the agenda.

UNITED STATES PRESS FOR TAX AGREEMENT

Biden called for a unified minimum corporate tax rate of 15% in negotiations with the Organization for Economic Co-operation and Development (OECD) and the G20.

His proposal has so far gained broad support from countries like France and Germany, as well as the International Monetary Fund.

German Finance Minister Olaf Scholz suggested it would herald “a revolution in international corporate taxation”.

However, Britain, the current host of the G7, has remained on the fence and called for broader reforms.

Ireland has expressed “significant reservations” about Biden’s plan. Its 12.5% ​​tax rate is one of the lowest in the world, prompting tech giants like Facebook and Google to make Ireland the seat of their European operations.

Proponents argue that a minimum tax is needed to stem competition between countries over who can offer multinationals the lowest rate.

They say a “race to the bottom” undermines revenues that could go to other government priorities.

Corporate tax is one of the two pillars of global tax reform efforts, the other being a “digital tax” that would allow countries to tax the profits of multinationals headquartered abroad.

Britain wants multinationals to pay taxes that reflect their operations, as nations around the world seek to fix virus-ravaged finances.

“Securing a global digital tax deal has also been a key priority this year,” Sunak said in a statement ahead of Friday’s meeting.

“We want businesses to pay the right amount of tax in the right place, and I hope we can come to a fair deal with our partners.”

Britain, which will later host the UN COP26 climate summit in November, also wants the G7 to embrace a green recovery.

However, NGOs accuse the G7 of not having invested enough in green energy during the pandemic and of heavily subsidizing polluting industries instead.

According to a report by Britain’s Tearfund and Overseas Development Institute (ODI) and Canada’s International Institute for Sustainable Development (IISD), the seven countries have injected $ 189 billion into fossil fuels such as oil, gas and coal between January 2020 and March 2021, but only $ 147 billion for clean energy investments.

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