The finance ministers of the world’s seven most powerful and industrialized economies unanimously backed a plan to raise at least a 15 percent tech tax deal on multinational corporations. If implemented, large companies will be required to pay taxes in their home countries. This will be a big blow to the “tax havens”.
The finance ministers of the United States, Canada, Germany, France, Britain, Italy, and Japan (G7) met in London on Saturday, June 5. They issued a joint statement announcing their agreement on a “global tax”. If this principle is implemented, all large corporations must pay this income tax in any country in which they actually operate.
French Economy and Finance Minister Bruno Lumière called the agreement “a historic step in the fight against tax evasion”.
The German Finance Minister also spoke of positive action to increase solidarity and justice.
The British Minister of Finance also said: After years of debate, the G7 countries reached a historic agreement that could harmonize the international financial system with the times and the digital world.
Bruno Lumer warned that Internet companies, especially in the Corona era, have expanded their market and made huge profits. In his view, it is not acceptable for these companies to continue to evade fair taxes.
Transformation of tax geography
Currently, large companies such as Apple or Microsoft declare their revenues in a country with a “cost-effective” tax system. As a result, they do not pay taxes in other countries, even in the face of widespread activity. The Microsoft subsidiary in Ireland, for example, made $ 315 billion in profits last year but paid no taxes to the Irish government. Because the company is registered and officially established in the Bermuda Islands!
Bruno Lumière, one of the main founders of corporate taxation, wrote on Twitter that today’s move was just the beginning. He said efforts should be made in the coming months to keep the “minimum tax” rate to a maximum.
According to the French Minister of Economy, a rate of 15% is not enough. The Group of Seven statements emphasizes that when companies in a particular country have significant revenue, It makes sense that part of this income should remain in the same country.
Many companies, on the other hand, transfer their earnings immediately to their country of origin or to some tax-havens.
The idea of a global tech tax deal is not from today
The idea of a global tax was seriously raised about two years ago by the Organization for Economic Co-operation and Development. But such a plan was inconceivable during the presidency of Donald Trump. Undoubtedly, the agreement and support of the US government is one of the main reasons for the recent decision of the Group of Seven. The next step in advancing the plan is to present it at the G20 summit, which is due to take place in Venice in about a month.
According to Le Monde, if the international tech tax deal is levied at 15 percent of revenues, it will provide governments with $ 150 billion a year. Implementing such a plan would also be a major blow to the “tax havens.” But in addition to some small countries with this reputation, countries such as Ireland or Poland also oppose the new plan. Because they have been able to attract many companies over the past twenty years by relying on a relatively easy tax system.
In order to advance its plan, the Group of Seven must be able to satisfy these types of countries in some way.