The Group of Seven (G7), a club of wealthy democracies, has reached a historic deal on Saturday to impose higher taxes on multinational companies such as Google, Apple and Amazon.
The decision of G7, which consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, would hold to raising billions of dollars to help them tackle the economic fallout of COVID-19.
The group agreed to back a minimum global corporate rate of at least 15% and for companies to pay more tax in the markets where they sell their goods and services, Reuters reported.
“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 announced after chairing a two-day meeting in London.
The latest agreement would end national digital services taxes levied by Britain and other European countries on the technology giants.
The G7 deal will also be discussed in an upcoming meeting of the G20, which is set to meet next month in Venice in order to get broader agreement.
“It’s complicated and this is a first step,” Sunak said.
The finance ministers of G7 also reached an agreement under which tech firms will be bound to declare the impact of their business on environment so investors can take decision easily.
Germany and France have also welcomed the agreement, although French Finance Minister Bruno Le Maire said he would fight for a higher global minimum corporate tax rate than 15%, which he described as a “starting point”.
German finance minister Olaf Scholz termed the deal “bad news for tax havens around the world”.
“Companies will no longer be in a position to dodge their tax obligations by booking their profits in the lowest-tax countries,” he added.
The agreement does not make it clear which businesses will be taxed, referring only to “the largest and most profitable multinational enterprises”.