Video: G7 Finance Ministers Wrangle Over Global Tax (Bloomberg)
A newly inked global deal to tax multinational tech corporations is good for Canada and its businesses, federal Finance Minister Chrystia Freeland said Saturday after a framework agreement was reached among G7 finance ministers.
“Multinational corporations need to pay their fair share of taxes and the G7 has just outlined a path to make this possible,” she tweeted from London.
No other details were immediately available.
Freeland, who is also deputy prime minister, said taxing tech firms would allow Canadian businesses to compete on “a fair and level playing field” in the global economy.
The framework could force some of the world’s biggest companies, including U.S.-based tech giants like Facebook, Google, Apple and Microsoft, to pay taxes in countries where they have high sales but no physical headquarters.
In the absence of an agreement among the world’s leading industrialized nations, Freeland had indicated Canada was prepared to unilaterally impose its own digital services tax starting Jan. 1, 2022.
The ministers from the world’s wealthiest democracies also agreed to support a global minimum corporate tax rate of at least 15 per cent in order to deter multinational companies from avoiding taxes by stashing profits in low-rate countries.
Britain’s Treasury chief Rishi Sunak, the meeting’s host, said the deal would reform the global tax system to make it fit for the global digital age and to ensure “the right companies pay the right tax in the right places.”
U.S. Treasury Secretary Janet Yellen said the agreement provides momentum to reaching a global 15 per cent rate.
“That global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world,” she tweeted after the meeting.
The global minimum tax rate was backed by U.S. President Joe Biden, who originally pushed for a minimum tax rate of 21 per cent.
France cheered Saturday’s agreement and claimed credit for acting as its catalyst.
“We made it! After 4 years of battle, a historic accord was reached with G7 member states,” French Finance Minister Bruno Le Maire tweeted. “France can be proud!”
The meeting of G7 finance ministers came ahead of the annual summit of G7 leaders scheduled to take place from June 11 to 13 in Carbis Bay, Cornwall.
The corporate tax rate endorsement from the G7 could help build momentum for a deal among more than 140 countries as well as a Group of 20 finance ministers set to meet in July.
This report by The Canadian Press was first published June 5, 2021.
— With files from The Associated Press
Ross Marowits, The Canadian Press