Bargaining over global tax enters key stage

28 June, 2021 12:00 AM printer

PARIS: Nearly 140 countries will haggle over key details of a global corporate tax plan this week, with some concerned about giving up too much and others eager to ensure tech giants pay their fair share.

The Group of Seven (G7) wealthy democracies approved a proposal to impose a minimum corporate tax rate of at least 15 percent earlier this month, hoping to stop a “race to the bottom” as nations compete to offer the lowest rates, reports AFP.

It is one of two pillars of reforms that would also allow countries to tax a share of profits of the 100 most profitable companies in the world—such as Google, Facebook and Apple—regardless of where they are based.

The deal now goes to the Organisation of Economic Co-operation and Development (OECD), which is overseeing two days of talks starting Wednesday to find a consensus among 139 countries.

The proposal will then be taken up by the G20 club of wealthy and emerging countries at a meeting of finance ministers in Italy on July 9 and 10.

“I don’t think we have ever been so close to an agreement,” said Pascal Saint-Amans, director of the OECD tax policy centre.

“I think that everybody has realised that a deal is better than no deal,” Saint-Amans told France’s BFM Business radio earlier this month, adding that failing to agree would lead to unilateral taxes and US reprisals.

US President Joe Biden has galvanised the issue by backing the global minimum corporate tax, and Europeans want a deal, he said.

Negotiations have gained new urgency as governments seek new sources of revenue after spending huge sums on stimulus measures to prevent their economies from collapsing during the coronavirus pandemic.

While the G7 -- the United States, Canada, Japan, France, Britain, Italy and Germany—approved the plan, it still faces hurdles as the negotiations expand to other nations.

European Union members Ireland and Hungary are not thrilled about it, as their corporate taxes are less than 15 percent.