Economy & Politics

Global minimum tax on the G7 menu

Revived by the administration of US President Joe Biden, this “pillar” of a vast tax reform carried by the OECD is on the program of the meeting of the seven finance ministers on Friday. It is decried by some European countries.

Revived by the administration of US President Joe Biden, this “pillar” of a vast tax reform carried by the OECD is on the program of the meeting of the seven finance ministers on Friday. It is decried by some European countries.

London, June 4, 2021 (AFP) – For the first time since the start of the pandemic, the finance ministers of the seven great powers are meeting in person. Environment, aid to developing countries and vaccines will be on the menu at the G7 Finance meeting which opens in London on Friday. But the global minimum tax bill should be at the heart of much of the debate.


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Under discussion since 2017 within the OECD, the measure returned to the forefront last week with the official support of the Biden administration. If the Grand Duchy ensures that it is going “in the right direction”, the concrete implementation of the measure promises to be difficult.


Revived by the administration of US President Joe Biden, this project is presented as the first “pillar” of a vast tax reform carried by the OECD. Closely followed by the possibility of taxing the profits of large multinationals, especially digital giants, where they make their profits and no longer just where they are recorded.

“We want businesses to pay the right amount of tax in the right place and I hope we can get a fair deal with our partners,” UK Finance Minister Rishi Sunak said in a statement. British daily The Guardian gives for example Thursday the Irish subsidiary of Microsoft which did not pay any tax on the companies last year because it is registered in Bermuda, in spite of profits of 315 billion dollars.

For the G7, it is a question of responding to the “tax avoidance strategies” of these companies, underlines a source close to the negotiations. According to her, Germany, Canada, the United States, France, Italy, Japan, the United Kingdom and the European Union have “never been so close to an agreement” on the question.

This project, desired in particular by Paris for several years, has benefited from a flashback thanks to the coming to power of Democrat Joe Biden, more favorable to multilateralism than his predecessor, the Republican Donald Trump. In addition, Americans like many other countries are looking for new resources to replenish their public finances hard hit by the pandemic, with support measures or stimulus packages running into the hundreds of billions of dollars. The Biden administration first spoke of a minimum corporate tax rate of 21% before changing its mind to 15%, in order to rally more votes.



The Biden administration’s support for the project to create a minimum threshold for the taxation of international corporations appears to be the return of the United States to the path of multilateralism, Pierre Gramegna said Thursday, who said he wanted to put an end to “the race towards the bottom ”in terms of taxation.


The G7 Finances should express “strong support” for an “ambitious” minimum corporate tax and a “fair” distribution of “rights to tax” the profits of multinationals, especially the big names in digital, according to the draft. joint press release obtained by AFP.

Faced with countries which have already expressed their opposition to the project, such as Ireland or Hungary, whose corporate tax rates are particularly low, the G7 countries are counting on an “international negotiation movement” which could bring the refractory to rally. The Luxembourg Minister of Finance, Pierre Gramegna (DP), for his part welcomed a proposal which “goes in the right direction”, since “in the interest of Europe and the United States”. Luxembourg would be one of the big winners from this 25% minimum tax system. It would indeed receive 283% more corporate tax revenue in 2021 if a minimum global corporate tax rate of 25% were applied – far ahead of Ireland (+ 168%) and the EU average ( + 50%).

Note that a formal agreement could not be announced until the next G20 finance ministers in July in Venice, before validation by the 38 OECD countries.


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