The Group of Seven is about to negotiate taxes on the world’s largest corporations

The major advanced economies of the Group of Seven are on the verge of concluding a corporate tax treaty for multinationals that will pave the way for a global deal later this year, setting new rules for taxing major companies around the world.

The G7 deal could be sealed as early as Friday after progress has been made among senior officials in recent days – and it would be a powerful force and a precondition for an agreement in the formal negotiations taking place at the OECD in Paris led by the G20. It will be a whole.

The OECD deal potentially represents the largest international corporate tax turmoil in a century, drastically reducing the ability of companies to shift profits to low-tax territories and ensuring that America’s digital giants are able to sell to the countries in which they do business. More taxes.

Under the Biden administration, the United States urged the Group of Seven to reach a consensus of its own to start talks with the Organization for Economic Cooperation and Development so that a final agreement can be reached in the coming months.

Last week, the United States slashed its ambitions for a global minimum corporate tax rate by 21 percent to an effective tax rate of 15 percent in an effort to increase its international appeal.

He also reassured other countries that he is serious about taxing some of the global profits of the largest multinationals on the basis of location and that the “two pillars” of the deal are closely linked.

In recent weeks, the United States has become increasingly convinced that most G7 countries are on board with plans building on the plans of the Organization for Economic Cooperation and Development last year. Germany and Italy strongly supported a global minimum tax.

Italian Finance Minister Daniele Franco, chair of the Group of Twenty, said Friday that the latest US proposal is “another important step” and that the prospects for a global deal on international tax reform are “now palpable.”

France and the United Kingdom have put more emphasis on localizing tax payments. International officials describe the UK as “difficult” to negotiate.

However, in London, ministers and officials insist that both elements of the deal come first and that the United States government is serious about pressuring Congress to change the location of corporate tax payments.

British officials said their position did not change over the weekend, but those close to the negotiations said last week that there had been some kind of consensus, and a deal, initially in the G7, seemed likely.

The G7 has no official role in this, but the United States, Japan, Germany, the United Kingdom, France, Italy and Canada are a powerful bloc in other forums. The group hosts a virtual Treasury Cabinet meeting on Friday and a face-to-face meeting in London on June 4-5 to help negotiate key elements of the agreement.

If the Treasury ministers managed to reach an agreement informally, the G7 leaders could formally sign it at the Cornwall Summit on June 11-13, referring to the 135 countries participating in the Organization for Economic Cooperation and Development (OECD) as part of the “comprehensive framework” negotiations, and come up with a plan.

US National Security Adviser Jake Sullivan tweeted on Saturday, referring to the growing interest in the opportunities for a global corporate tax deal, “The world is closer than ever to global minimum taxes. I appreciate the positive response to our proposal and thank Secretary Yellen and our partners around the world for Their work is in this area. This is what you feel when you let the world end the race to the bottom. “

The G20 has said it wants to reach an agreement by summer and the G7’s advance still makes this ambitious timetable possible, although officials close to the talks believe October is a more realistic date for an international agreement. Copyright The Financial Times Limited 2021.