G7 Finance Ministers has agreed to back an historic international agreement on global tax reform, which would make big international companies to start paying their fair share of tax.
Meeting in London on 4-5 June 2021, they also agreed to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate in.
UK Chancellor Rishi Sunak, who chaired the G7 Finance Ministers meeting, said in a press statement:
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.
During the meeting, the Finance Ministers agreed the principles of an ambitious two Pillar global solution to tackle the tax challenges arising from an increasingly globalised and digitalised economy.
Under Pillar One of this agreement, the largest and most profitable multinationals would be required to pay tax in the countries where they operate – and not just where they have their headquarters.
The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate.
Under Pillar Two, at least 15% global minimum corporation tax operated on a country by country basis would be applied.
Discussions on the two Pillar solution have been ongoing for many years. The agreement will now be discussed in further detail at the G20 Financial Ministers & Central Bank Governors meeting in July.
Read the G7 Finance Ministers and Central Bank Governors Communiqué
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