The G7’s finance ministers have announced a historic international agreement on global tax reform.
Finance ministers have held years of discussions and have now agreed to reforms, which they say will see multinationals pay their fair share of tax in the countries in which they do business. The ministers also agreed to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate in.
The G7 also made a commitment to make it mandatory for firms to report the climate impact of their investment decisions, to ensure markets play their part in the transition to net zero. Firms will also need to set down concrete steps to crack down on environmental criminals.
Commenting on the agreement, Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said: ‘Finding agreement on international tax at the G7 is no mean feat and will light the touchpaper for the wider multilateral process at the OECD.
‘Consensus on corporation tax means that a real sense of momentum can now build ahead of the G20 later in the year, helping to pave the way forward for an international tax system that is simpler, more sustainable and easier to comply with.
‘Businesses have worked hard with the OECD in recent years to move the process forward and will continue to do so to achieve a global tax system fit for the 21st century.’
“A globalised tax rate for multinational companies solves the issue of countries undercutting each other with their rates. It also modernises the tax system as there are much more companies operating in multiple countries than before.”
Nigel Holland