G7 Nations ‘Just One Millimeter’ From Historic Tax Deal

The Group of 7, representing some of the world’s richest nations, are within touching distance of a historic deal to close the net on large companies which do not pay their fair share of tax, France and Germany said on Friday after a day of talks in London. Conway G. Gittens has more.

The first in-person meeting of the Group of 7 finance ministers since the health crisis could be on the verge of producing a breakthrough.

Economic leaders from the G7, Canada, France, Germany, Italy, Japan, U.S. and the U.K., gathered together for talks on Friday, and are ” just one millimeter” from a historic global tax deal being pushed by the U.S., French Finance Minister Bruno Le Maire told the BBC.

U.S. Treasury Secretary Janet Yellen, on behalf of the White House, proposed a minimum global corporate tax rate of 15%, which is below the lowest rate of any of the G7 nations.

A particular focus of the minimum tax rate are the big international tech firms like Amazon, Facebook and Google parent Alphabet, which are adept at exploiting the differences in varying corporate tax codes.

British Finance Minister Rishi Sunak said “It is increasingly clear that in a complex, global, digital economy, we cannot continue to rely on a tax system that was largely designed in the 1920s. And I will just say this: the world has noticed. And I believe they have high expectations for what we all can agree over the coming days.”

A deal could raise tens of billions of dollars for governments, offsetting the big spending done by many governments to prop-up their economies during the health crisis.

Finance ministers speaking to the press were optimistic that an agreement could be reached before talks wrap up on Saturday.

There are, however, some major hurdles to clear before a deal is reached, including what the minimum tax rate should be, and how the rules should be drawn up to ensure that companies pay their fair share of taxes.

Any agreement between finance ministers lays the groundwork for more intense talks next week when their bosses – presidents and prime ministers – gather in England.

Whatever is decided would then need to have buy in from the wider G20, which includes the world’s richest nations, as well as developing economies. That group meets in July.