G7 on brink of ‘world-changing’ deal on corporate tax abuse

The G7 group of the world’s wealthiest nations has said it is on the brink of agreeing a historic international tax deal to close the net on multinational firms exploiting the system.

Finance ministers from the UK, the US, Japan, France, Canada, Germany and Italy were negotiating a minimum global rate of corporation tax as they met in person for the first time since the start of the pandemic.

Hosting the meeting in London on Friday and Saturday, UK chancellor Rishi Sunak said the world cannot “continue to rely on a tax system that was largely designed in the 1920s”.

Bruno Le Maire, the French finance minister, said the group was “just one millimetre” away from an agreement that would raise more tax from firms such as tech giants Google, Amazon and Facebook that book profits in low tax states.

Olaf Scholz, the German finance minister, was also confident the talks would end in a world-changing deal.

“These are very successful talks, we are making progress and I’m absolutely confident we will get agreements today and tomorrow, and we will be able to have a very clear message on global corporate taxation,” he told the BBC.

“We will have an agreement which will really change the world.”

The US has proposed a minimum global corporation tax rate of 15 per cent, which is below the lowest level in the G7 but above that in countries such as Ireland at 12.5 per cent.

Mr Le Maire described this as “only a starting point”.

“We need something that is credible,” he said. “We are still working on this very tricky point of the rate.”

In a briefing after Friday’s meeting, a Treasury spokesperson said: “Sunak was clear that large digital firms should pay an appropriate level of tax where they operate so countries can raise revenue and invest in their public services – a priority for the government – and highlighted that ‘opportunities to make truly lasting reforms like this do not come along very often’.”

Mr Sunak said he was “hugely optimistic” of concrete outcomes from the two-day summit.

Any deal struck by the G7 group would still need wider global negotiations at a meeting of the G20 in Venice in July and at the Organisation for Economic Cooperation and Development in Paris.