After more than eight years of debate on the issue, Mathias Cormann, Secretary-General of the Organization for Economic Cooperation and Development (OECD), ushered in a historic international protocol The finance ministers of the Group of 7 from the United States, Japan, the United Kingdom, Germany, France, Italy, and Canada discuss the key elements of global tax reform, aiming to solve the tax challenges related to the digitalization and globalization of the global economy. Happened, the economy is rapidly digitizing.
The agreement requires the largest multinational technology giants to pay a fair share of taxes in the countries where they operate, at least 15% of the world’s lowest tax rate. If the agreement is finalized, it will help build momentum for the talks between 139 countries in Paris and the broader agreement discussed at the upcoming G20 meeting of finance ministers in Venice in July.
The G-7 countries also agreed to follow the United Kingdom and enforce the climate report, and agreed to take measures to combat the proceeds of environmental crime to ensure that the market plays a role in the transition to net zero.
As the British Finance Minister Rishi Sunak said, Say After the London G-7 meeting:
“The finance ministers of the Group of Seven countries reached a historic agreement to reform the global tax system and adapt it to the global digital age.”
he still Add to“These earthquake-like tax reforms are something the UK has been promoting, and they are also a huge reward for British taxpayers-to create a fairer tax system suitable for the 21st century. This is a truly historic agreement, and I am very I am proud that the G7 has demonstrated collective leadership at this critical moment in our global economic recovery.”
OECD Secretary-General Coleman also warmly welcomed the outcome of the G7 Finance Ministers’ Meeting:
“The combined effects of globalization and the digitalization of our economy have created distortions and inequalities. Only through multilaterally agreed solutions can these problems be effectively resolved.”
He continued: “The consensus reached among the finance ministers of the Group of Seven today, including the lowest level of global taxation, is a landmark step towards the global consensus necessary to reform the international tax system. There is important work. But this decision adds important impetus to discussions among the 139 member states and jurisdictions of the upcoming OECD/G20 inclusive framework BEPS. We will continue to seek final agreements to ensure fair payments by multinational companies everywhere Share.”
Global tax reform
The Finance Ministers of the Group of Seven countries agreed to the principles of a two-pillar global tax solution to meet the tax challenges brought by the increasingly globalized and digitalized global economy proposed by the OECD.
According to the principles of the first pillar, the largest and most profitable multinational companies must pay taxes in the country where they operate—not just where their headquarters are located. These rules will apply to multinational companies with a profit margin of at least 10%, and 20% of any profit exceeding the 10% profit margin will be redistributed and taxed in the country in which they operate.
According to the second pillar, these companies will pay a minimum global corporate tax of at least 15% by country.
Improve climate disclosure
Prior to the London Climate Action Week, the G7 finance ministers also pledged for the first time to properly consider climate change and biodiversity loss in the economic and financial decision-making process, thereby accelerating action on environmental issues and making climate-related issues Mandatory financial disclosures in the respective economies. In November 2020, the United Kingdom became the first country to commit to doing so.
The broader G-20 group of countries is also discussing the promotion of mandatory reporting. Countries are expected to agree to mandatory disclosure of climate-related financial information in their economies before the United Nations Conference of the Parties on Climate Change (COP26) in Glasgow in November.
The views, thoughts and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozeli, Esq., CPA, is an international tax lawyer and certified public accountant. He often writes articles on tax, legal and accounting issues for tax notes, Bloomberg BNA, other publications and the OECD.