The G7 countries are close to an agreement on taxing large companies. Such an agreement limits companies’ ability to transfer profits to countries with a more flexible tax system, allowing them to evade payments.
And according to the British business newspaper Financial Times, significant progress has been made in recent days by the negotiators of the two countries and could lead to an agreement on Friday. A deal that should pave the way for a global corporate tax deal later this year.
The biggest change in a century
The G7 members are among the countries with the largest economies in the world. Agreement between states will be a precondition for a broader agreement. The deal with OECD countries is likely to lead to the largest change in international corporate taxation in a century. Among other things, it would force large US tech companies to pay taxes in countries where turnover is also achieved.
Under the leadership of the Biden administration, the United States urged the Group of Seven to reach a deal of its own. The Americans see this as a way to get the OECD talks to go more smoothly and to reach a final agreement quickly.
In recent weeks, the United States has become increasingly confident that the majority of the G7 countries are behind their plans, which build on those drawn up by the Organization for Economic Cooperation and Development last year. Germany and Italy, for example, have spoken out in favor of a global minimum tax. France and the United Kingdom attach more importance to where the tax is paid.
Effect
The G7 has no formal role in the broader agreement process. But an agreement between the major countries, namely the United States, Japan, Germany, the United Kingdom, France, Italy and Canada, has a clear impact on making more decisions. Next month, the countries ’agreement could be offered to 135 countries negotiating with the Organization for Economic Cooperation and Development.
