Tech giants and multinational companies such as Amazon, Google, Facebook will no longer be able to shift profits to low-tax offshore havens, after G7 Nations led by the US and UK agreed on a deal on taxation.
The landmark deal agreed on Saturday, June 5, will enable them to squeeze more money out of the corporate giants.
Hundreds of billions of dollars could flow into the governments of the Group of Seven (G7) from this new deal after they agreed to back a minimum global corporate tax rate of at least 15%.
Facebook in a statement said it expected it would have to pay more tax, in more countries, as a result of the deal.
“G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” British finance minister Rishi Sunak said after chairing a two-day meeting in London.
The meeting, hosted in central London, was the first time finance ministers have met face-to-face since the start of the pandemic.
U.S. Treasury Secretary Janet Yellen said the “significant, unprecedented commitment” would end what she called a race to the bottom on global taxation.
German finance minister Olaf Scholz said the deal was “bad news for tax havens around the world”.
According to Yellen, the G7 meeting was a return to multilateralism under Biden and a contrast to the approach of U.S. President Donald Trump, who alienated many U.S. allies.
“What I’ve seen during my time at this G7 is deep collaboration and a desire to coordinate and address a much broader range of global problems,” she said.