The world's seven most developed economies, the United States, Canada, France, the United Kingdom, Germany, Japan and Italy, have agreed a "historic" agreement to reform the tax system. Under the pact, large companies such as technology and digital companies will be taxed in the territories where they make their profits. G7 members have committed to at least a 15% minimum corporate tax rate.
This agreement will be discussed at the next G20 meeting in Venice. "This is the first step taken by the G7, but we still need to meet with the G20 and reach agreement with a wider group of countries," said British finance minister Rishi Sunak, who hosted the meeting. Paolo Gentiloni, the European Commissioner for Economic Affairs, has already assured that the EU Commission will "actively contribute" to tax reform. The OECD considers this agreement to be a "historic step" that will put an end to "distortions and inequalities".
The pact had been on the negotiating table for years, but consensus among members had not yet been reached. "For the first time we have reached an agreement on tangible principles on what these reforms should look like and this is a great process," said Sunak. For the British minister, this agreement is "fair", as tech giants "pay the right tax in the right place and this is a huge price for the British taxpayer".
Chrystia Freeland, Canada's finance minister, agrees with her British counterpart, saying that this decision will benefit Canadians and Canadian businesses and ensure "a fair and level playing field in the global economy". "Multinational corporations must pay their fair share of taxes," Freeland said.
Bruno Le Maire, the French finance minister, has pledged to "fight for this corporate tax rate to be as high as possible". The US administration had proposed a rate of 21%. Jenet Yellen, US treasury secretary, called the agreement a "historic achievement" and recalled how Donald Trump's administration stalled the negotiations.
German Finance Minister Olaf Scholz also welcomed the G7 decision, saying it was "very good news for tax justice and solidarity and bad news for tax havens around the world".
The big technology companies have also expressed their views on the agreement reached in London. For Facebook, the decision is "a significant first step towards certainty for businesses and strengthening public confidence in the global tax system". Nick Clegg, the social network's head of international affairs, admitted that they want the tax reform process to "succeed". Amazon's spokesman said that this agreement "will help bring stability to the international tax system".
However, there are also voices critical of this agreement, considering it insufficient. "It is absurd for the G7 to claim that it is reforming the tax system by setting a global minimum corporate tax rate that is similar to the rates charged by tax havens in Ireland, Switzerland or Singapore," explained the OXFAM association. The organisation does not consider this pact "fair", and reminds that tackling the inequality caused by the coronavirus pandemic will be impossible if companies continue not to pay what they owe. "The G7 cannot expect the majority of the world's countries to accept crumbs".