The G7 countries, after many years of discussion, reached an agreement on the introduction of the so-called digital tax – a tax on the profits of multinational companies in the digital economy. This was announced on Saturday, June 5, by British Finance Minister Rishi Sunak after a meeting in London with his G7 colleagues.
“G-7 finance ministers today, after years of discussions, have reached a historic agreement to reform the global tax system, to make it fit for the global digital age — and crucially to make sure that it’s fair so that the right companies pay the right tax in the right places,” Sunak said.
The purpose of the innovation is to put an end to the situation around large IT corporations such as Apple, Google, Amazon or Facebook which pay tax at the place of their registration only, but not in the countries where they get income.
This led to the practice of many companies to register their headquarters in countries with lower taxes.
In addition, it is assumed that the income tax for large corporations should equal to at least 15 percent.
The introduction of a global corporate tax has been discussed for the past eight years. The negotiations have received a new impetus in recent months after the proposals of the new US President Joe Biden. The US Treasury Department has proposed to establish a global corporate income tax of at least 15% This, according to the US, should ensure the prosperity of the global economy and stimulate innovation and growth. Now American companies are paying the 21% rate after its decrease by the administration of former US President Donald Trump. Previously, the rate was at 35%, CNBC notes.
Head of the Ministry of Finance of the Federal Republic of Germany, Olaf Scholz, called the agreement reached a “tax revolution.” “This is very good news for tax fairness and solidarity and bad news for tax havens around the world,” he commented the minimum tax concept for companies to dpa agency, pointing out that corporations will no longer be able to evade their tax obligations.
The agreement between the industrialized countries must now be adopted by other states, for example, the G20, which will meet in July in Venice.
It is anticipated that only “the most profitable transnational corporations” will suffer from the new tax. US Treasury Chief Janet Yellen noted that after the new rules come into force, European countries will abandon the current taxes on digital services. The United States believes that it discriminates against US companies.