Historic taxation on global technology companies.. It starts at 15% and goes up

The Group of Seven countries on Saturday agreed to adhere to at least 15% of the minimum global corporate tax set by each country.

“We pledge to reach a equitable solution on the allocation of taxation rights, whereby countries would have the right to tax at least 20% of profits over and above the 10% margin of the largest and most profitable multinationals,” a said in the statement. The finance ministers of the group’s countries, seen by Reuters. .

“We will provide necessary coordination between the implementation of the new international tax rules and the abolition of all digital services taxes and other similar measures relating to all companies,” he said.

In return, French Finance Minister Bruno Le Maire on Saturday believed the Group of Seven’s agreement to impose a global tax on corporate profits is a “historic step” in the “fight” against “tax evasion”, according to AFP. . and improve it.”

And about the rate agreed by the G7 finance ministers in London to “at least 15%”, the minister stressed in a video broadcast on Twitter, “This is a starting point and we will be working to ensure that in the coming months.” We will endeavor that this tax rate is raised as high as possible.”

“The fight will continue in the G20 and in the OECD, but what was taken here in London within the framework of the G-7 is a historic step that all of us Frenchmen should be proud of,” he said.

G7 finance ministers expect a “historic” agreement on a global minimum corporate profit tax and better distribution of tax revenue for multinationals, especially digital giants, after a two-day meeting in London.

Earlier, French Minister Bruno Le Maire said in front of some reporters on the sidelines of a meeting, in his first appearance since the outbreak of the COVID-19 pandemic, “If we reach an agreement (Saturday), it will be historic progress ..”

British Finance Minister Rishi Sunak, whose country currently chairs the Group of Seven, acknowledged that the group had organizedUseful talks on reforming the global tax systemand the challenges of the digital economy.

The G7 (UK, France, Italy, Canada, Japan, Germany and the United States) are benefiting from a resurgence of US interest in the issue as Joe Biden arrives at the White House, and seeks to introduce global corporate tax reform. In the spirit of the work done in the Organization for Economic Co-operation and Development.

The reform targets major technology companies that pay low taxes despite large profits, which amount to tens of billions and even hundreds of billions of dollars, by setting up their headquarters in countries where the corporate tax rate increases. is low or even non-existent.

Le Maire and his German, Italian and Spanish counterparts noted in a joint article published Friday in the British newspaper The Guardian that the digital giant has benefited from the crisis and “make profits at an unparalleled level compared to other sectors.”

This comes at a time when countries around the world are seeking to compensate for the money spent in the framework of economic aid or recovery programs in the event of a pandemic crisis.

A European source said that “before the crisis it was difficult to understand, after the crisis it became impossible to accept.”

The OECD proposes a reform based on two pillars: on the one hand, better distribution of tax authority on multinational corporations where they release their sales figures, and on the other hand, the imposition of a global minimum tax on corporate profits.

In an effort to gain the support of more countries, the United States first introduced a minimum corporate tax of 21 percent, before lowering it to 15 percent.

Stiff talks were going on on this issue on Friday evening as well. Bruno Le Maire considered that the 15% limit represented a “minimum” for corporate tax.

great speed

“With our partners in the Group of Seven, the Group of Twenty and the Organization for Economic Co-operation and Development, we aim to strive to reach a more ambitious rate,” he said.

He believed that “if an agreement is reached in the Group of Seven (Saturday), it would give a major impetus to G-20 negotiations,” referring to a later meeting to be held in Venice, Italy in July. Happened.

On the other hand, he warned that “if we fail” on Saturday it will be “complicated” after “finding the dynamics in the G20” and reaching an agreement could be postponed “indefinitely”.

Kantan Parinello of the non-governmental organization Oxfam considered that “15% would be absolutely insufficient” and that “a settlement without mentioning a specific percentage would be a real failure” which would be a setback for many years.

Most actors realize that they have to collaborate with the G-20 countries and then themselves, with the roughly 140 countries working on the tax reform project within the Organization for Economic Co-operation and Development.

The challenge will be particularly convincing countries that have built their economies on low corporate tax rates, such as Ireland, which has attracted the European headquarters of many multinationals, particularly in the fields of technology and pharmaceuticals, as well as with American companies.

Irish GDP, a significant weight of its activities, grew 7.8% in the first quarter of the year thanks to these companies, while without them it would have declined by 1% due to health restrictions.

According to a European source, the EU will have to find a way to go along with countries like Ireland to find another economic model.

Bruno Le Maire refers to the current crisis as a “stagnation” by showing that “tax evasion and the race for the lowest possible level of taxation”.