G7 reaches 'historic agreement' to stop big firms avoiding tax
The Chancellor hailed a"historic agreement" on corporation tax, ITV News Political Correspondent David Woods reports
The G7 has reached a "historic agreement" to reform the global tax system, which Chancellor Rishi Sunak says will ensure multinational companies "pay the right tax in the right places".
The deal - achieved during a meeting of G7 finance ministers in London - will see France, Italy, Germany, Canada, Japan and the United States commit to a global minimum corporation tax rate "of at least 15%".
Changes will also be made to ensure major corporations, especially those with a strong online presence, will pay taxes in the countries where they record sales and not just where they have an operational base.
Speaking after the meeting, Mr Sunak said: "I am delighted to announce that today after years of discussion G7 finance ministers have reached a historic agreement to reform the global tax system.
Rishi Sunak on the 'historic agreement':
"To make it fit for the global digital age, but crucially to make sure that it is fair so that the right companies pay the right tax in the right places and that's a huge prize for British taxpayers."
The Treasury said the G7 finance ministers had signed up to "an ambitious two-pillar global solution to tackle the tax challenges arising from an increasingly globalised and digital global economy".
A spokeswoman said: "Under pillar one of this historic agreement, the largest and most profitable multinationals will 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."
She added: "Under pillar two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a country-by-country basis, creating a more level playing field for UK firms and cracking down on tax avoidance."
G20 countries, which includes emerging economies such as China and India, are also likely to be lobbied to sign up to the rate floor.
According to the BBC, German finance minister Olaf Scholz said a 15% base corporation tax deal would “change the world” by helping countries pay back debts that have built up during the pandemic.
French finance minister Bruno le Maire meanwhile urged Ireland, which has one of the lowest corporate tax rates in the European Union, to get “on board”.
The finance ministers meeting is a precursor to the gathering of G7 leaders, which is due to be held in Carbis Bay in Cornwall from June 11-13.
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