G7 to negotiate taxation of world’s largest companies

The major advanced economies in the Group of Seven are on the verge of a corporate tax treaty for multinational corporations, which will pave the way for a global deal later this year, creating new rules for taxing large companies around the world.

A G7 treaty could be sealed early Friday after progress among senior officials in recent times – and a powerful force and a prerequisite for formal negotiations to take place at the OECD in Paris and an agreement led by the G20 Will be. Will be overall.

An OECD deal would mark perhaps the biggest upheaval in international corporate taxation in a century, reducing companies’ ability to shift profits to low-tax areas and ensure that America’s digital giants sell to those countries Are able where they do business. higher taxes.

Under the Biden administration, the United States urged the G7 to reach its consent to begin OECD negotiations so that a final agreement could be reached in the coming months.

Last week, the United States, in an effort to increase its international appeal, lowered the global minimum corporate tax rate from 21 percent to an effective tax rate of 15 percent.

He also reassured other countries that he was serious about the global profits of some of the largest multinational companies taxed by location and that the two “pillars” of the deal are inextricably linked.

In recent weeks, the United States has become increasingly confident that it has most of the G7s with plans to be built on last year’s OECD plans. Germany and Italy strongly support the global minimum tax.

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The chairman of the G20, Italian Finance Minister Daniel Franco, said on Friday that the latest US proposal was “another important step” and that the prospects of a global deal on international tax reform are “now solid”.

France and the UK have placed greater emphasis on localization of tax payments. International officials describe Britain as “difficult” to negotiate.

In London, however, ministers and officials insist that both elements of the deal come first and that the US government is serious about insisting on Congress to change the location of corporation tax payments.

British officials said their position had not changed over the weekend, but people close to the talks said that there was some kind of consensus last week and that there was a possibility of a deal in the G7 initially.

The G7 has no formal role in this, but the nations of the United States, Japan, Germany, United Kingdom, France, Italy and Canada form a powerful bloc in other forums. The group is hosting a virtual Treasury ministers meeting on Friday and a face-to-face meeting in London on 4 and 5 June to help negotiate key elements of an agreement.

If Treasury ministers can reach an agreement informally, G7 leaders can officially sign the Cornwall summit, citing 135 countries participating in the OECD as part of the “inclusive framework” negotiations, a plan. Can come with

In a sign of growing interest in global corporate tax deal opportunities, US National Security Adviser Jake Sullivan tweeted on Saturday, “The world is closer than ever to the global minimum tax. I appreciate the positive response to our proposal and this I thank Secretary Yellen and our partners around the world for working in the field. It seems to end the race of the world to the bottom. “

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The G20 has said that they want to reach an agreement by summer and the progress of the G7 still makes this ambitious timetable possible, although officials close to the negotiations believe that October will be more of an international agreement. Can be a realistic date. – Copyright The Financial Times Limited 2021.

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