Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Global tax reforms that could raise billions edge closer as G7 on brink of agreement

Global tax reforms that could raise billions edge closer as G7 on brink of agreement

The shake-up plan has been driven by Joe Biden who wants to take on multinationals that shift profits to low-tax jurisdictions.

The biggest reforms to the global taxation system in a century are edging closer to reality, with the group of seven leading industrial economies now on the brink of agreeing to a global minimum corporate tax rate, insiders have told Sky News.

The unprecedented plans could mean the UK raises billions of pounds in taxes from tech giants and other big companies which have previously shifted profits around the world to avoid them.

G7 finance ministers are expected to agree to keep their business tax rates above a certain level - likely to be 15% - at next week's meeting in London, according to insiders close to the discussions.

US Treasury Secretary Janet Yellen will attend the meeting in London


The radical shake-up is being pushed by US President Joe Biden, who has vowed to confront long-standing corporate tax avoidance by multinational corporations, which routinely shift their profits to low-tax countries in an effort to reduce their payments to governments.

He has pushed for the minimum corporate tax rate, though some countries are resisting.

Ireland's finance minister, Paschal Donohoe, told Sky News that he stands firm by the country's 12.5% tax rate and has "significant concerns" about Mr Biden's plans.

The UK's corporation tax rate is currently 19%, but is set to rise to 25% by 2023.

The G7 - which comprises the US, Japan, Germany, the UK, France, Italy and Canada - is now likely to agree a shared position at the London summit next Friday and Saturday.

"We think an agreement between the G7 to get a common position on this is possible at next week's ministerial," a G7 insider told Sky News, though they added that it was unlikely to come in tomorrow's virtual summit of ministers and central bank governors.

Agreement depends in part on the US committing to other global tax reforms, including an overhaul of how the taxes are calculated and apportioned between countries.

This represents a significant shift, as last week insiders were briefing that an agreement looked unlikely.

The chancellor, Rishi Sunak, had originally intended for the meetings to focus primarily on climate change rather than tax reform.

However, insiders say discussions on the tax will now play a significant part in the London meeting.

A Treasury spokesman said the UK was pushing for a deal at the London meeting, which US Treasury Secretary Janet Yellen will attend in her first foreign visit since being appointed.

But the spokesman said it was dependent on the US committing to the other proposals on international tax put forward by the OECD - the international government organisation leading the work on reform.

"Reaching an international agreement on how large digital companies are taxed has been a priority for the chancellor since he took office," he said.

"Our consistent position has been that it matters where tax is paid and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities.

Combined corporate tax rates


"That is what our taxpayers would expect and is the right thing for our public services.

"We welcome the US's renewed commitment to tackling the issue and agree that minimum taxes might help to ensure businesses pay tax - as long as they are part of that package approach."

The UK currently raises around £400m from a digital services tax on the tech giants - something that has long frustrated the US.

However, insiders believe that the combined global minimum tax and reforms on calculating taxes owed would potentially raise billions for the UK, with the minimum tax dwarfing those other parts.

Should a deal be sealed, the UK would ditch its digital services tax.

Alex Cobham of the Tax Justice Network, which argued in favour of international business tax reform, said: "The G7 ultimately dictates the OECD negotiations, so the suggestion that agreement is close on a global minimum corporate tax rate is significant.

"Such is the low rate of tax actually paid by major multinationals at present that even imposing an effective rate of just 15% would potentially raise some $275bn in additional, annual revenues worldwide - arguably the biggest change in international tax rules in a century.

"The UK alone stands to receive up to $15bn of that - crucial funds to support public services and the pandemic recovery, and more than twenty times what the government hoped to raise from its digital services tax.

"But it is crucial that undertaxed profits are allocated to countries according to where multinationals' real economic activity takes place - otherwise the headquarters countries, starting with the US, will take a completely disproportionate share of the revenues.

"The UK should also push for a minimum effective rate of 25%, as the Independent Commission for the Reform of International Corporate Taxation has recommended."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
A monster hit and a billion-dollar toy empire
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
Canada: Nurse Suspended and Fined 93 Thousand Dollars After Stating the World’s Most Well-Known Fact Since the Creation of Adam and Eve, That There Are Only Two Genders
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
U.S. Treasury Secretary Whitney Bessent Backs Stablecoins to Boost Treasury Demand
Spain to Declare Disaster Zones After Massive Wildfires
Three-Minute Battery Swap Touted as Future of EVs
Beijing Military Parade to Showcase Weapons Advances
U.S. Tech Stocks Slide on AI Boom Concerns
White House Confirms Talks Over Intel Stake
Trump Suggests U.S. Could Support Ukraine ‘By Air’
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
UK Government Tries to Sue 4chan for Breaching Online Safety Act
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
"Every Centimeter of Your Body Is a Masterpiece": The Shocking Meta Document Revealed
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
Beijing is moving into gold and other assets, diversifying away from the dollar
China Requires Data Centres to Source Majority of AI Chips Locally, For Technological Sovereignty
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
Trump Backs Putin’s Land-for-Peace Proposal Amid Kyiv’s Rejection
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
Jellyfish Swarm Triggers Shutdown at Gravelines Nuclear Power Station in Northern France
OpenAI’s ‘PhD-Level’ ChatGPT 5 Stumbles, Struggles to Even Label a Map
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
×