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Final negotiations at the G7 on the global minimum tax on profits

2021-06-04T20:25:47.195Z


The seven finance ministers meeting in London agree on the principles of the major tax reform targeting multinationals.


As in any international negotiation, the final discussions on a number or a comma of the press release are the most delicate.

Meeting on Friday and Saturday in London, the finance ministers of the seven major industrialized countries (G7) showed their desire to reach an agreement on the key subject of their busy agenda: the reform of the taxation of multinationals and a global minimum tax on profits.

Read also:

Minimum global tax: compromise in sight

For this reunion in flesh and blood, a first in G7 format since the Chantilly meeting in July 2019, the dominant state of mind was the convergence of views.

While the Trump Administration had blocked negotiations in 138 countries orchestrated for three years by the OECD (the international organization based in Paris) to fight against the tax optimization of multinationals and Gafa in particular, the proposals of Joe Biden have restarted the machine.

After proposing a global minimum threshold of 21% corporate tax (IS), the White House put on the table a rate at 15%, more acceptable by countries having built a financial attractiveness with a very low rate IS.

A necessary step but not sufficient

In this complex process of discussion with 138 countries, an agreement in the G7 is a necessary step, giving a decisive political impetus, but not sufficient.

The next stage will be played out in July in Venice, among the G20 countries, under Italian presidency.

For the negotiators in London, the difficulty was to publish a press release - scheduled for Saturday at midday - sufficiently proactive, without

"locking up"

, says a senior European official, the G20 member states with a text too tied up.

Read also:

In 2021, “normal” presidencies for the G7 and G20

Friday afternoon, while the ministers were discussing other topics on the agenda - the economic situation, the anti-Covid vaccination or the climate - their advisers finalized the press release.

"We will have an agreement that will really change the world," said

German Olaf Scholz.

"There are still slight difficulties"

, conceded Bruno Le Maire at the microphone of the BBC.

He wants the agreement to focus on a global minimum tax threshold (“pillar 2” of international negotiations), but also on the new distribution of the taxation of digital giants (“pillar 1”).

The scope of the companies concerned is still under discussion.

Will they be groups with more than $ 750 million in global turnover, as the OECD suggests, or the hundred most profitable companies, as Washington suggests?

This question was not settled Friday evening.

The rules of the 21st century

What is at stake,

added the French minister,

is the ability for Western countries to define the rules for the 21st century

”.

Implication: if there is no agreement within the G7, China, within the G20, could make its voice heard more.

For Bruno Le Maire, a rate of “

15% is a starting point

”. He is campaigning for the press release to mention a rate "

of at least 15%

" which would open the door to further increases, in order to make this new tax system more efficient. Rishi Sunak, the Chancellor of the Exchequer and host of the meeting, seems less inclined to mention a number in the statement. But one thing is certain, he said as he opened the meeting:

“In a complex, global, digital economy, we cannot continue to rely on a tax system that was largely designed in the 1920s. 

In a column co-signed in the

Guardian

, the French, German and Italian ministers, as well as their Spanish colleague, who is not a member of the G7, stressed that

"fiscal dumping cannot be an option for Europe"

nor

"for the rest. of the world".

According to the OECD, large business tax avoidance and tax avoidance strategies each year embezzle approximately $ 200 billion from tax service coffers around the world.

Source: lefigaro

All news articles on 2021-06-04

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