The Group of Seven leading advanced economies is close to a corporate tax agreement with multinationals, paving the way for a global agreement later this year to create new rules for the imposition of taxes on most companies in the world.
A G7 deal could be sealed on Friday after progress was made among top officials in recent days-and could be a powerful force and a necessity for a formal agreement. negotiations held by the OECD in Paris and governed by the broader G20.
An OECD agreement is likely to bring the most international tremors corporate tax in a hundred years, it severely restricted the ability of companies to transfer revenue to short -lived tax jurisdictions and ensure that U.S. digital giants pay more taxes in the countries where they sell.
Under the Biden administration, the US has pushed the G7 to reach its own conscience as a means of stimulating OECD talks so that a final agreement can be reached in the coming months.
the US last week reversed its ambitions of a global minimum corporate tax rate, which was lowered from 21 per cent to an effective rate of 15 per cent to increase international appeal.
It also assured other countries that it was serious about the offer to allow a share of global income in most multinationals to be taxed based on the location of sales, and the two “pillars” of the deal were inseparable.
In recent weeks, the U.S. has increasingly relied on being on board most of the G7 with plans, built on blueprints made by the OECD last year. Germany and Italy have become prominent supporters of a world minimum tax. Daniele Franco, Italy’s finance minister, who heads the G20, said on Friday that the US’s latest proposal is “a significant step” and hopes for a global agreement on international tax reform is “already concrete”.
France and the UK place more emphasis on the location of tax payments. International officials have described the UK as “difficult” to negotiate. But in London, ministers and officials insisted they wanted to make sure the same element of the deal came first and the U.S. administration was serious about pushing for a change in the location of corporate tax payments through Congress.
UK officials said over the weekend that their position had not changed, but those close to negotiations said that last week there was something of a meeting of thoughts and a change of heart. G7. G7. G7 G7.
The G7 has no formal role in the process, but the US, Japan, Germany, UK, France, Italy and Canada have formed a strong bloc in other forums. The group held a virtual meeting of finance ministers on Friday and a personal meeting on June 4 and 5 in London where the central elements of a deal could be agreed, according to officials.
If the agreement can be reviewed informally by finance ministers, G7 leaders could formally sign it at the Cornwall summit on June 11 to 13, showcasing a plan by the 139 negotiating countries. in the “inclusive framework” of the OECD.
In a sign of growing interest in the opportunities of a global corporate tax deal, Jake Sullivan, the U.S. national security adviser, on Saturday tweeted: Good to hear a positive reception at our suggestion and thanks to Secretary Yellen and our partners around the world for their work on it. This is what it looks like to guide the world to finish the race to the bottom. ”
The G20 has said they want to move forward this summer and the progress of the G7 makes this ambitious schedule possible, even if officials close to the talks think October may be. a more realistic date for a full international agreement.
Countries with lower corporate tax rates have not yet signed their agreement. Irish finance minister Paschal Donohoe stressed that small countries should continue to use taxes as a competitive tool.
Ireland’s finance department said on Monday that “key decisions have not yet been discussed at the political level by 139 finance ministers within the [OECD] accompanying framework, including timeframe enforcement and legal basis [for the proposals]”.
Further reporting by Laura Noonan in Dublin