The G7 countries are approaching an agreement on taxation of large corporations. Such an agreement restricts the ability of companies to send profits to countries with more flexible tax regimes, which allows them to avoid paying.
According to the British business newspaper Financial Times, there has been tremendous progress by the countries’ negotiators in recent days, and this could lead to an agreement on Friday. An agreement would pave the way for a global corporate tax deal later this year.
The biggest change in a century
G7 members are among the largest economies in the world. An agreement between countries would be a precondition for a broader agreement. An agreement with the OECD countries would lead to the biggest change in international corporate taxation in a century. Among other things, large U.S. technology companies will be forced to pay taxes in countries where turnover can be achieved.
Under the leadership of the Biden administration, the United States has urged the G7 to pursue its own will. American sees this as a way for OECD negotiations to run more smoothly and reach a final agreement quickly.
In recent weeks, the United States has become increasingly confident that the majority of the G7 will be behind their plans, creating the maps drawn by the OECD last year. For example, Germany and Italy are openly talking in favor of a global minimum tax. France and the United Kingdom place great importance on the place of taxation.
The G7 has no formal role to play in the process of reaching a broader agreement. But the agreement between the key countries, the United States, Japan, Germany, the United Kingdom, France, Italy and Canada, has a clear influence on further decisions. The 135 countries negotiating with the OECD may be awarded the treaty next month.