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Major advanced economies will agree on a common position to tax multinational corporations on Saturday in an attempt to end a three-decade race to the bottom in corporate taxation that would increase extra revenue for governments around the world.
Finance ministers from the G7 group of nations were still haggling over the details of the deal last Friday, at a meeting in London hosted by British Chancellor Rishi Sunak.
Delegates at the meeting said the G7 would agree in principle to change the foundations of international corporate tax law for the first time in a century. The historic plan aims to force the world’s largest companies to pay more taxes in the countries where they do business, not just where they are headquartered.
German Finance Minister Olaf Scholz told the BBC he was “absolutely certain” that the ministers would reach an agreement. “We will have an agreement that will really change the world,” he said.
Bruno Le Maire, the French finance minister, said ministers were on the brink of a “historic deal” that would show the world that the G7 remains a global force in determining the rules of the game in the future. 21st century international order.
A person closely related to the negotiations said he was expecting “a very good statement” when the talks ended on Saturday.
Countries have been negotiating the search for an international tax deal since 2013. Talks at the OECD left the United States and European countries in jeopardy, especially on the taxation of large U.S. technology companies, but the prospects for a deal rose substantially after Joe Biden replaced Donald Trump. as president of the United States earlier this year and presented new proposals.
G7 finance ministers are expected to release a statement on Saturday outlining their new common position and supporting the Biden administration’s call for a global regime for the world’s largest companies and a global minimum rate. .
Questions that remain to be resolved include whether any global minimum tax would be at the rate of 15% proposed by the United States or whether it should be defined as “at least 15%,” according to someone involved.
Two people familiar with the talks said the United States was pushing for “tough negotiation” on the question of when the UK, France and Italy should get rid of their digital taxes when an agreement is reached.
The United States wants this to be immediate, but France and the United Kingdom think this is not initial because it would let the digital giants pay less taxes than now based on the commitment that the United States will implement an agreement, but before the laws are approved in Congress.
“We hope to reach an agreement, but the details are very balanced,” one person involved said.
The UK Treasury said there had been “progress”, but Sunak’s allies said there were still restricted points on which companies would be responsible and what part of their global profits would be affected.
Meanwhile, the United States is interested in a global minimum rate, as it would prevent its technology giants from transferring its profits to low-tax jurisdictions.
Much of the tax collected is likely to come from U.S. companies, so the person said Janet Yellen, the U.S. Secretary of the Treasury, was “pushing hard negotiations.”
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