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The Group of the seven major advanced economies is approaching an agreement on corporate taxation of multinationals, paving the way for a global agreement by the end of the year to create new rules for the imposition of taxes on larger companies. Of the world.
A G7 pact could be sealed on Friday after a breakthrough among senior officials in recent days, and would be a powerful force and a prerequisite for an agreement on formal negotiations taking place at the OECD in Paris. they are run by the G20 in general.
An OECD deal would likely lead to the biggest shock at the international level corporate taxation for a century, severely reducing the ability of companies to move profits to low-tax jurisdictions and ensuring that American digital giants paid more taxes in the countries where they made sales.
Under the Biden administration, the United States has been pushing hard for the G7 to reach its own consensus as a way to spur OECD talks so that a final agreement can be reached in the coming months.
He WE last week it reduced its ambitions for a global minimum corporate tax rate, reducing it from 21% to an effective rate of 15% to increase its international appeal.
He also assured other countries that he was serious in his bid to allow a portion of the global profits of the largest multinationals to be taxed based on the location of sales, and that the two “pillars” of the deal are inseparable.
In recent weeks, the United States has become increasingly confident of having most of the G7 on board with its plans, based on plans drawn up by the OECD last year. Germany and Italy have been vocal supporters of a global minimum tax. Daniele Franco, Italy’s finance minister, who chairs the G20, said on Friday that the latest US proposal was “another important step” and that the prospects for a global agreement on international tax reform “now they are concrete “.
France and the United Kingdom have put more weight on the location of tax payments. International officials describe the UK as having been “difficult” in the negotiations. But in London, ministers and officials insist they want to make sure the two elements of the deal are prioritized and that the US administration is serious about pushing the shift towards the location of payments. corporate taxes through Congress.
UK officials said over the weekend that their position had not changed, but those close to the negotiations said there had been a meeting of minds last week and an agreement, initially at the G7, seemed likely.
The G7 has no formal role in the process, but the nations of the US, Japan, Germany, the UK, France, Italy and Canada form a powerful bloc in other forums. The group is holding a virtual meeting of finance ministers and a face-to-face meeting on Friday 4 and 5 June in London where the central elements of an agreement can be agreed, officials said.
If finance ministers can reach an agreement informally, G7 leaders could formally sign it at the Cornwall summit from 11 to 13 June, presenting a plan to the 139 nations negotiating under the “inclusive” framework. “in the OECD.
As a sign of growing interest in the possibilities of a global agreement on corporate taxes, Jake Sullivan, the US national security adviser, tweeted on Saturday: “The world is closer than ever to ‘a global minimum tax. It is great to hear the positive reception of our proposal and thank you to Secretary Yellen and our partners around the world for their work in this regard. That is what seems to lead the world to finish the race to the bottom.
The G20 has said it wants to reach an agreement by summer and G7 progress is making that ambitious timetable still possible, although officials close to the talks think October may be a more realistic date for a comprehensive international agreement.
Countries with lower corporate tax rates have not yet signaled their agreement. Ireland’s finance minister, Paschal Donohoe, has stressed that smaller countries must be able to continue to use taxes as a competitive tool.
Ireland’s finance department said on Monday that “key decisions have not yet been discussed at the political level by the 139 finance ministers of the [OECD] inclusive framework, including the implementation deadline and the legal basis [for the proposals]”.
Additional reports from Laura Noonan in Dublin
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