May 19, 2022


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Rishi Sunak prepares to chair G7 finance ministers summit in London : CityAM

Rishi Sunak will tomorrow chair the first day of this year’s G7 finance ministers summit in London, with a global taxation deal set to be on top of the agenda.

The chancellor has said his major priorities for the two-day summit will be an agreement on a global tech tax and to urge other G7 countries to implement mandatory climate reporting targets for public companies.

UK Daily Politics 2021

Joe Biden’s plan to set a 15 per cent minimum corporation tax rate among OECD countries and to crack down on 100 of globe’s largest multinationals avoiding tax will be a key starting point for any deal.

International agreement is needed on any new comprehensive online tax as the Organisation for Economic Co-operation and Development (OECD) oversees treaties on how profits of multinationals are taxed.

Various media outlets have reported that Sunak does not support the plan as there are not enough assurances that giant tech firms, like Amazon and Facebook, will pay their fair share of tax in the UK.

However, the chancellor told Reuters today that the plan could work and would be discussed at the G7 finance ministers summit.

“It’s certainly something we can work with as long as it meets our objectives of getting at the right companies and on the face of it, it can,” he said.

 “We just need to work through the details.”

The plan would focus on the profits of the 100 biggest companies that have benefitted most from globalisation, chief among them tech giants, which have seen their businesses boom during the pandemic.

However, this could be offset by the minimum corporation tax rate Biden wants to implement, which may result in more companies paying tax in the US instead of other countries.

Biden showed today how serious he was about getting a deal done as he slapped tariffs on six countries, including on £626m goods made in the UK.

He immediately suspended the 25 per cent tariffs and will not reinstate them if a tax deal is struck within the next six months.

US Trade Representative Katherine Tai said: “Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs.”

The UK government unilaterally implemented its own digital services tax last year on online marketplaces, like Amazon, for the business they do in the UK, however the chancellor has said it is only a stopgap until when a global tech tax can be agreed.

This move was said to anger the Trump White House and Biden also wants to see it scrapped.

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German Finance Minster Olaf Scholz yesterday told Reuters that he expects the G7 finance ministers to make “significant progress” on corporate tax issues at tomorrow’s summit.

“It’s becoming clearer now that there can be a consensus on this issue as well, so that we indeed reach our goal that all major digital companies will be taxed,” he said.