G7 historic tax deal threatens Amazon, Google

For the first time in 2 years, representatives of G7 countries met face to face in London, England. (Image: Getty Images)

Hundreds of billions of dollars could flow into countries’ coffers after the G7 group of major economies agreed to support a minimum global corporate tax of 15%. This change could force companies to pay taxes in revenue-generating countries, instead of extracting profits abroad, to tax havens.

While the G7 does not have the power to impose global standards, the agreement by seven of the world’s largest industrialized nations is seen as an important step towards a global agreement on corporate taxation.

After the announcement of the G7 finance ministers, Facebook said it may have to pay higher taxes, in more countries. The agreement was reached after eight years of negotiations and received renewed momentum in recent months following a proposal from the new US President Joe Biden.

British Finance Minister Rishi Sunak said after chairing a two-day meeting in London: “G7 Finance Ministers have reached a historic agreement to reform the global tax system to make it more suitable for the digital age.” . This is the first time the Finance Ministers have met face-to-face since the beginning of the epidemic season.

US Treasury Secretary Jane Yellen called it “an important, unprecedented commitment”, while German Finance Minister Olaf Scholz said the deal was “bad news for tax havens around the world”.

According to Reuters, current global tax regulations date back to the 1920s, not suitable for the context of many technology giants, selling remote services and registering profits in low-tax countries. Important details of the new tax system will be negotiated over the next few months.

The G20 meeting next month in Venice (Italy) will see if the G7 agreement has received widespread support from the world’s largest developing countries.