On June 5, local time, the Group of Seven (G7) meeting in London reached a historic agreement that multinational companies such as Google, Apple and Amazon will have to pay higher global corporate taxes. The Group of Seven nations agreed to set the world’s lowest corporate tax rate of at least 15%.
For many years, developed countries have been seeking ways to allow multinational companies to pay more taxes. Previously, multinational companies often avoided taxes by moving to countries with low tax rates. According to United Nations data, the transfer of profits by multinational corporations causes governments to lose between US$500 billion and US$600 billion in tax revenue each year.
The setting of the world’s lowest corporate tax rate will raise hundreds of billions of dollars for countries to cope with the aftermath of economic turmoil in 2020. However, the agreement has not yet clearly stipulated which businesses will be included, and only involves the largest and most profitable multinational companies.
U.S. Treasury Secretary Yellen said that this will end the “race to the bottom” of countries competing to lower corporate tax rates. In April 2021, Yellen suggested at the G20 Finance Ministers’ Meeting that the global minimum corporate tax should be unified at 21%. This time it was reduced to 15%, reducing the difficulty of passing the plan.
deal! G7 agreed to set the world‘s lowest corporate tax or end “tax havens.” Click on the video to have a look!
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