London, Jun 5 (EFE).- Finance ministers at a G7 meeting in London on Saturday announced a “historic” agreement on the principles of fiscal reform that will require the world’s leading multinationals to pay higher taxes in countries where they make sales.
Rishi Sunak, the United Kingdom’s Chancellor of the Exchequer and host of the meeting in London, announced the deal in a video posted to his Twitter.
“I’m delighted to announce that the G7 finance minister today, after years of discussions, have reached a historic agreement to reform the global tax system to make it fit for the global digital age and crucially to make sure that it’s fair so that the right companies pay the right tax in the right places.”
The agreement, which had been expected, foresees a minimum global corporation tax of 15% for the largest companies on a country-by-country basis in order to crack down on tax avoidance, Sunak said in a statement.
Under the current system, companies can operate in one country but report profits in another, often with a lower tax bracket.
Global firms with a profit margin of over 10% will be in the “scope” of the new plan. Some 20% of any profit above the 10% margin will be subject to tax in countries where a company makes sales, the statement continued.
The deal will be analyzed by G20 members and representatives of central banks in July.
“I’ve made securing an agreement on digital tax a key priority of mine for the G7 Presidency with the fairer system raising more tax to pay for public services.”
Huge global companies like Google and Amazon will be affected by the deal, which will require them to pay more money to governments at a time when countries are looking to offset huge debts incurred during the Covid-19 pandemic.
While national economies have been battered by Covid-19 restrictions, many companies like Amazon have reported record profits during the pandemic as people shifted to online services more than ever before.