Rishi Sunak said finance ministers from the Group of Seven (G7) leading industrialized nations signed the agreement on the second and final day of meetings in London.
They said they have agreed to commit to a global minimum corporate tax of at least 15 per cent on a country by country basis.
“I’m delighted to say that G-7 finance ministers 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,” Sunak said in a video message posted on Twitter.
🚨 At the <a href=”https://twitter.com/G7?ref_src=twsrc%5Etfw”>@G7</a> in London today, my finance counterparts and I have come to a historic agreement on global tax reform requiring the largest multinational tech giants to pay their fair share of tax in the UK.<br><br>👇The thread below explains exactly what this means. <a href=”https://twitter.com/hashtag/G7UK?src=hash&ref_src=twsrc%5Etfw”>#G7UK</a> <a href=”https://t.co/HdcK1HuM91″>pic.twitter.com/HdcK1HuM91</a>
The agreement comes as major economies are aiming to discourage multinationals from shifting profits — and tax revenues — to low-tax countries regardless of where their sales are made.
The meeting of finance ministers was held ahead of an annual summit of G7 leaders scheduled for June 11-13 in Carbis Bay, Cornwall in southwest England. The U.K. is hosting both sets of meetings because it holds the group’s rotating presidency.
U.S. Treasury Secretary Janet Yellen said the finance ministers made a “significant, unprecedented commitment” toward achieving the tax rate to end a “race to the bottom” on corporate taxation.
“The global minimum tax would also help the global economy thrive, by levelling the playing field for businesses and encouraging countries to compete on positive bases,” such as education, research and infrastructure, Yellen said in a statement.
Canadian Finance Minister Chrystia Freeland also praised the agreement. She tweeted that it would ensure a “fair and level playing field” in the global economy for Canadians and Canadian businesses.
Multinational corporations need to pay their fair share of taxes and the <a href=”https://twitter.com/G7?ref_src=twsrc%5Etfw”>@G7</a> has just outlined a path to make this possible. This is good news for Canadians and Canadian businesses, and will ensure a fair and level playing field for them in the global economy. <a href=”https://t.co/keEc2RpPTR”>https://t.co/keEc2RpPTR</a>
Google said on Saturday that it “strongly supports” the work being done to update international tax rules.
“We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon,” Google spokesperson Jose Castaneda said in an emailed statement.
The G7 has also been facing pressure to provide vaccines for low-income countries facing new surges of COVID-19 infections and to finance projects to combat climate change.
In their communique after the talks, the finance ministers promised to work on a “sustainable, balanced and inclusive global recovery that builds back better and greener” from the COVID-19 pandemic, recognising the disproportionate impact of the pandemic on certain groups including women, youth and vulnerable populations.”