Crackdown on companies

G7 ministers agree 15% tax deal amid warning

Rishi Sunak: ‘seismic reforms’ (pic: HM treasury)

Huge multi-nationals, such as Amazon, Facebook and Google, will be forced to pay taxes at a minimum rate of 15% following a historic agreement by G7 finance ministers.

The companies will pay levies on sales in the country in which they are earned, as well as where they have headquarters.

Chancellor Rishi Sunak said: “These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer – creating a fairer tax system fit for the 21st century.

“This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”

Germany’s Olaf Scholz said the agreement will “change the world” as a means to raise extra revenue post-Covid after a drop in tax receipts and massive hikes in borrowing.

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The move aims to stop companies who book profits in jurisdictions where they pay little or no tax and narrow their advantage over domestic players.

In a statement the G7 said: “We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies.”

Only large companies with profit margins of at least 10% will be affected. A total of 20% of any profit above the 10% margin will be reallocated.

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The UK had the G7’s lowest corporate tax rate at 19 per cent, while Ireland, which has long gained an advantage from its 12.5% corporation tax rate, is being urged to come on board.

US President Joe Biden has been pushing for a global rate of 15% “at least”. 

Bruno Le Maire, the French finance minister, said the agreement would build unstoppable momentum to implement lasting tax reforms.

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