Historic Global Tax Agreement Reached by G7 Finance Ministers
On June 5, G7 finance ministers reached an historic global tax reform agreement, fulfilling the promise of chancellor Rishi Sunak to ensure the world’s biggest international businesses make an appropriate contribution.
Key details of the agreement reached at the G7 summit:
- G7 Finance ministers strike seismic agreement on global tax reform that will mean the largest multinational tech giants will pay their fair share of tax in the countries in which they operate.
- Following two-days of talks chaired by Chancellor Rishi Sunak in London, counterparts agree to reforms which will see multinationals paying tax in the countries where they do business.
- As part of landmark deal, finance ministers also agree to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate.
- Nations also agree to follow UK lead in making climate reporting mandatory and agree measures to crack down on the proceeds of environmental crimes.
The culmination of several years of discussions, finance ministers from the G7 nations reached an agreement that will see major international companies face fair tax obligations in the countries in which they do business. It was also agreed that multinationals should pay a global minimum tax rate of at least 15% in every country they operate in.
Speaking after the event, Chancellor Rishi Sunak commented on the significance of the landmark agreement and its positive impact for the UK economy.
“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,” he said.
“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.”
Further Focus on Environmental Issues
It was also agreed at the meeting that G7 leaders should follow in the footsteps on the UK, by demonstrating genuine commitment to the integration of climate change prevention and biodiversity preservation in all the aspects of financial and economic decision-making.
Since the creation of the Task Force on Climate-Related Financial Disclosures (TCFD) six years ago, the United Kingdom has played a major role in ushering G7 nations in a more proactive direction where major climate issues are concerned. Specifically, the UK has encouraged and inspired the G7 to make climate disclosures mandatory across their respective economies.
Support for Vulnerable Countries
G7 ministers also pledged to offer additional support to poor and vulnerable countries worldwide, furthering the group’s milestone backing of $650bn general allocation of Special Drawing Rights (SDRs) earlier this year.