The finance ministers of the Organization of Industrialized Economies scheduled for London over the weekend have formulated a reform of the global taxation system, as part of a fight against tax evasion. The plan includes a global corporation tax of 15%. While technology giants that may be affected by this have welcomed the move, Oxfam has claimed that raising the minimum corporate tax rate by 15% is “too low” to bring about change.
The deal announced over the weekend between representatives of the United States, Britain, France, Germany, Canada, Italy and Japan, along with the EU, could cause billions of dollars to flow into governments so they can pay off the debts accumulated during the spread of the corona. The British Chancellor of the Exchequer, Rishi Sonak, who hosted the summit in his country, said that “the agreement will create a fair system suitable for the 21st century”.
The agreement reached included a principle according to which international companies will be charged a minimum tax rate of about 15% in each country in which they operate. However, charities have argued: “It is absurd that the G7 conference claims to ‘fix’ the global tax system, by setting a minimum corporate tax rate, similar to the rates charged by countries like Switzerland, Singapore and Ireland,” said Oxfam CEO Gabriela Butcher “They set a low threshold until companies can just slip away from it.”
“We need to ensure the benefits of the idea of a minimum tax rate so that the revenue is distributed fairly around the world,” he told the BBC.
Conditions for international companies to pay taxes where they operate will apply to global companies with a profit margin of at least 10%. This is when about 20% of all profits will go to the countries in which they operate, according to the G7 announcement. However, the agreement has not yet been finalized, and is expected to be discussed before the 20G countries at a meeting next month in the presence of China and India.