G7 Nations Set Minimum Global Corporate Tax Rate at 15%

By Adedapo Adesanya

Finance ministers from the G7 nations on Saturday pledged to commit to a minimum global level of corporate tax of at least 15 per cent.

The US-led proposal focuses on creating a global minimum corporate tax rate as well as special rules to change how much tax companies pay and where it is paid.

The deal aims to get multinationals — particularly tech giants — to pay more into government coffers hit hard by the pandemic.

The global minimum tax would be levied only on the world’s 100 largest and most profitable companies like Royal Dutch Shell, Exxon Mobil, Apple, among others.

If a company pays taxes somewhere with a lower rate, it would probably have to pay top-up taxes.

“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,” a communique from G7 finance ministers.

“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.

“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,” said British Finance Minister, Mr Rishi Sunak, who chaired the talks.

“The G7’s decision on international tax justice is historic,” Germany’s Finance Minister, Mr Olaf Scholz said in a statement.

“It is very good news for tax justice and solidarity and bad news for tax havens around the world.”

French Finance Minister Mr Bruno Le Maire said the group’s commitment was a “starting point,” pledging to hike it further.

“This is a starting point and in the coming months we will fight to ensure that this minimum corporate tax rate is as high as possible,” Mr Le Maire said.

Corporate tax is one of two efforts being put together by governments to strengthen global fiscal reform, the other being a “digital tax” to allow countries to tax the profits of multinationals headquartered overseas.