Germany “confident” in global agreement on corporate tax rate
Rich-country Group of Seven (G7) finance ministers today decided to back US-backed plans for a global minimum level of corporate tax aimed at bringing in multinationals – especially giants of technology – to pour more into government coffers hit hard by the pandemic.
German Finance Minister Olaf Scholz has said he is confident the G7 talks will end with a global tax deal that will change the world.
“These are very fruitful discussions, we are making progress and I have absolutely no doubts that we will get deals today and tomorrow,” he told the BBC after the first day of the G7 finance ministers meeting in London.
“We can get a very clear message on global corporate taxation,” he told the BBC after the first day of the G7 finance ministers meeting in London.
“We will have a deal that will truly change the world.”
According to a draft press release consulted by AFP, the chief financial officers and central bankers of the seven richest nations in the world will express “strong support” and a “high level of ambition” on a minimum world tax rate on companies.
They then hope to reach a broader agreement at a G20 finance meeting scheduled for July.
US President Joe Biden has called for a unified minimum corporate tax rate of 15% in negotiations with the Organization for Economic Co-operation and Development (OECD) and the G20.
His proposal has so far gained broad support from countries like France and Germany, as well as the International Monetary Fund.
An agreement on a minimum corporate tax rate is “in sight,” the finance ministers of France, Germany, Italy and non-G7 non-member Spain said today.
The corporate tax rate in Ireland is 12.5%. Finance Minister Paschal Donohoe said last April that he had “reservations” about a minimum overall corporate tax rate.
Depending on how it is designed and implemented, an overall minimum rate would undermine the tax advantage offered in low rate jurisdictions like Ireland.
Minister Donohoe attends the G7 talks as chairman of the Eurogroup – the collective term for informal meetings of euro area finance ministers.
He said ministers should “consider coordinated approaches to address key economic challenges facing economies emerging from the Covid crisis”, as well as “key global challenges including climate and nature, health financing and support to low-income countries “.
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Speaking ahead of the meeting, Mr Donohoe said: “There is now a clear light at the end of the tunnel with the acceleration of the roll-out of immunization, the decline in infections and the gradual decrease in pressure on health services. intensive care.
“This year, the euro area economy will rebound strongly. Our economic policies have helped facilitate this recovery and protect our citizens over the past year, maintaining jobs and enabling our economies to recover strongly. “
British Chancellor of the Exchequer Rishi Sunak has said he aims to strike a “fair deal” on digital taxation as he welcomes overseas ministers to London.
Ministers from the United States, Japan, France, Canada, Germany and Italy will attend the two-day meeting at Lancaster House in London, ahead of the leaders’ summit in Cornwall over the weekend next.
They will discuss measures to tackle climate change as well as efforts to reach an international agreement on how digital businesses are taxed.
Speaking ahead of the meeting, Mr. Sunak said: “The G7 is an extremely important group and it is an honor to welcome my counterparts to London with a renewed spirit of multilateral cooperation.
“Even before assuming the presidency of the G7, we were clear on our priorities – protecting jobs, securing a green and global recovery and supporting the world’s most vulnerable countries.
“Getting a global digital tax deal has also been a key priority this year – we want companies to pay the right amount of tax in the right place, and I hope we can come to a fair deal. with our partners.
“I am determined to work together and unite to tackle the world’s most pressing economic challenges – and I am extremely optimistic that we will achieve concrete results this weekend.
“Together, we can make real change and help guide the international community through the next step in our recovery.”
Chartered Accountants Ireland public affairs director Brian Keegan said the government was unlikely to agree to raise its corporate tax rate at this weekend’s G7 summit.
Mr Keegan told RTÉ’s News at One that the removal of Ireland’s 12.5% corporate tax rate has been a topic of discussion for years, but never happened.
“It’s something that people have been looking to do, if you mean to put it that way, for at least a decade,” he said.
He ultimately said, “being a low tax rate jurisdiction is not the same as being a low tax rate jurisdiction.”
“Even though we have a low tax rate, Ireland takes more of its businesses compared to the overall take than most other countries,” he said.
Mr Keegan said tax revenue was 5-10% of the total amount of taxes collected for most other countries.
“In Ireland, it’s closer to 20%, so the minister’s main priority will be to secure this flow of income that he already has,” he added.
US President Joe Biden is calling on other leaders to follow his lead in lowering corporate tax rates internationally.
Mr Keegan said President Biden needs to collect more taxes from his businesses, which he says will make the United States a little less competitive in the global market.
“So what Biden is urging other countries to do is pass a minimum corporate tax rate to somehow compensate for a gap between rising corporate tax rates in the United States and the global landscape.” , did he declare.