Hopes for a “historic” global agreement on corporate taxation as the G7 meets
Rich-country G7 finance ministers are expected to announce on Saturday their support for a global minimum corporate tax level, aimed at getting multinationals – especially tech giants – to pour more into hard-hit government coffers by the pandemic.
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 the tax plans supported by the States. United.
French Economy Minister Bruno Le Maire told reporters on Friday evening: “If we have an agreement tomorrow, it will be a historic step forward.”
It will also “give tremendous momentum to the G20”, which is due to hold a finance meeting in July, he said.
UK Finance Minister Rishi Sunak chaired the first of two days of meetings on Friday, held in person after restrictions on Covid-19 were eased and attended by his counterparts from Canada, France, Germany, Italy, from Japan and the United States.
The talks set the stage for a larger summit of G7 leaders in Cornwall, southwest England, from 11 June.
US President Joe Biden is expected to be on his first overseas tour since taking office in January.
– ‘Difficult to accept’ –
Momentum is building behind US-led plans to limit the ability of multinationals like tech giants to play with the system to increase profits, especially at a time when economies around the world are under pressure. shock of the coronavirus pandemic.
“Before the crisis, it was difficult to understand,” a European source told AFP. “After the crisis, it’s hard to accept.”
Corporate tax is one of the two pillars of global tax reform efforts, the other being a “digital tax” allowing countries to tax the profits of multinationals headquartered abroad.
“It is increasingly clear that in a complex, global digital economy, we cannot continue to rely on a tax system that was largely designed as in the 1920s,” Sunak said in his opening remarks.
“And I would just say this: The world has noticed it. And I think they have high expectations for what we can all agree to over the next few days.”
According to the draft statement, ministers also plan to commit to “maintaining political support” or stimulus, “as long as necessary” to foster economic recovery, while tackling climate change and inequalities in society. .
In addition, they will demand “equitable, safe and affordable access to Covid-19 vaccines” everywhere.
The thorny topic of regulating digital currencies like bitcoin will also be on the agenda.
– Agreement ‘within sight’ –
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.
An agreement is “in sight”, said Friday the finance ministers of France, Germany, Italy and Spain, not a member of the G7.
“We have a chance to get multinational companies to pay their fair share,” French Le Maire, German Olaf Scholz, Italian Daniele Franco and Spain’s Nadia Calvino told The Guardian newspaper.
“For more than four years, France, Germany, Italy and Spain have worked together to create an international tax system adapted to the 21st century,” added the four ministers.
“Now it’s time to come to an agreement.”
French Le Maire told reporters in London that the 15% proposed by Biden is “a minimum. For us, it’s a starting point.”
With its G7 and G20 partners, France wants “a more ambitious level of taxation”, declared the minister, the current pandemic crisis showing that “tax fraud, the race towards the lowest possible level of taxation, is deadlock”.
– ‘Largely insufficient’ –
Ireland, however, 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.
UK-based anti-poverty organization Oxfam argued Biden’s 15% proposal was too little, with the association’s France politician Quentin Parrinello telling AFP that a deal without a specific rate “would be a real failure”.
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” saps valuable revenue that could go to government priorities like hospitals and schools.
Britain wants multinationals to pay taxes that reflect their operations, as nations around the world seek to fix virus-ravaged finances.
Governments around the world have suffered a massive drop in tax revenue during the Covid lockdowns, while having to borrow vast sums to support their economies.
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© 2021 AFP