G7 sets minimum tax of 15% for MNCs

LONDON: The G7 group of leading economies have reached "a historic agreement" to reform the global tax system to make it fit for the global digital age. Speaking outside Winfield House in London's Regents Park on Saturday, the US Treasury Secretary Janet Yellen said the minimum rate of at least 15 per cent would end "the race to the bottom in corporate taxation".

In a tweet later, she added that global minimum tax would end the race-to-the-bottom in corporate taxation, and help the global economy thrive, by levelling the playing field for businesses and encouraging countries to compete on positive bases, such as educating and training their work forces and investing in research and development and infrastructure.

"Today G7 Finance Ministers and Central Bank Governors chaired by Chancellor Rishi Sunak agreed a landmark deal on global tax, and ways to build a strong, sustainable, balanced and inclusive global economic recovery," the G7 said in a tweet.

A G7 statement said: "We strongly support the efforts underway through the G20/OECD Inclusive Framework to address the tax challenges arising from globalisation and the digitalisation of the economy and to adopt a global minimum tax.

"We commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20 per cent of profit exceeding a 10 per cent margin for the largest and most profitable multinational enterprises. 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.

"We also commit to a global minimum tax of at least 15 per cent on a country by country basis. We agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors. (IANS)

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