The G7 finances opens on Friday, June 4 in London, with, as a priority subject, the global minimum tax project, revived by the administration of US President Joe Biden and which receives common support from the major European powers. This is the first time since the start of the pandemic that these finance ministers have met in person, and this meeting precedes the G7 heads of state in Cornwall (south-west England) the following week.
The question of a minimum global taxation, the first “pillar” of a vast tax reform carried by the Organization for Economic Co-operation and Development (OECD), will hold the upper hand, with, in the second part, the possibility to tax the profits of large multinationals, especially digital giants, where they make their profits and no longer just where they are registered.
“We want companies to pay the right amount of tax in the right place and I hope we can get a fair deal with our partners”British Finance Minister Rishi Sunak said in a statement released by the Treasury at the opening of the meeting. The finance ministers of Germany, France, Italy and Spain (the latter country not being a member of the G7) will defend a common position on the subject, according to an opinion piece published in the daily Friday. The Guardian.
The French Minister, Bruno Le Maire, the German Olaf Scholz, the Italian Daniele Franco and the Spanish Nadia Calviño commit to “Establish a common position on the new international taxation from the meeting of G7 finance ministers in London this Friday”, estimating that “The chance to reach an agreement is at hand” for the July G20 finance. “We have a chance that multinational companies are paying their fair share”, they add.
Replenish public finances
The Guardian as an example Thursday gave the Irish subsidiary of Microsoft, which paid no corporate tax last year because it is registered in Bermuda, despite profits of 315 billion dollars. For the G7, it is about responding to “Tax avoidance strategies” of certain companies, underlines a source close to the negotiations, according to which one did not “Never been so close to an agreement” On the question.
This project, desired in particular by Paris for several years, has benefited from a comeback with the coming to power of Mr. Biden, more favorable to multilateralism than his predecessor, the Republican Donald Trump. In addition, Americans, like many other countries, are seeking new resources to replenish their public finances which have been hit hard by the pandemic, with support measures or stimulus packages running into the hundreds of billions of dollars. The Biden administration initially pleaded for a minimum corporate tax rate of 21% before lowering their claims to 15% in order to garner more votes.
The G7 finances should express a “Strong support” minimum corporate tax ” ambitious “ and a distribution “Fair” from “Duties to be taxed” the profits of multinationals, especially the big names in digital, according to the draft joint press release obtained by Agence France-Presse. A formal agreement could only be announced at the next G20 finance ministers in July in Venice, before validation by OECD countries.
Rally the refractories
Faced with countries which have already expressed their opposition to the project, such as Ireland or Hungary, whose corporate tax rates are particularly low, the G7 countries are counting on a “International negotiation movement” which could lead the refractories to rally.
According to the provisional text, the G7 countries (United Kingdom, France, Germany, Italy, United States, Canada, Japan) should also commit to “Maintain supportive policies” to their savings, particularly with regard to new variants of the virus that could derail the recovery. They will reiterate promises of aid to developing countries, especially in obtaining anti-Covid vaccines.
The fight against climate change will also take center stage, with in particular a debate on international standards in terms of environmental transparency, CO markets2 or green finance. “I am determined that we will work together in unity to address the most pressing global economic challenges – and I am extremely optimistic that we will have concrete results this weekend”Mr. Sunak said.