The leaders of G7 countries will endorse the historic agreement reached last week by finance ministers for a global minimum corporate tax of at least 15 percent during their ongoing summit.
The U.S. proposal, agreed to by other member nations, is a critical step towards ending the decades-long race to the bottom that pushes nations to compete over who can offer the lowest tax rate to large corporations at the expense of protecting workers, investing in infrastructure, and growing the middle class.
“By making big multinational corporations pay their fair share and raising resources to fund priorities for domestic renewal – such as infrastructure, childcare, affordable housing, and education – a global corporate minimum tax is a key part of our efforts to deliver a foreign policy for the middle class, and will help support working families everywhere,” the White House said in a statement issued at the beginning of the G7 summit.
Today’s agreement paves the way for the removal of Digital Service Taxes (DSTs) and other discriminatory taxes. In addition to the agreement on a global minimum tax, the G7 also reached an agreement on a plan to replace DSTs with a broader reallocation of taxing rights to the places where the largest and most profitable multinational corporations are doing business and making money.
Importantly, this applies to large multinationals broadly, both domestic and foreign, and not just the technology sector. This will ensure that big multinational companies across the economy will pay a little more in the places where they operate, whether or not they have their headquarters there. The United States and our G7 partners are actively considering a global effort to multiply the impact of the International Monetary Fund’s proposed Special Drawing Rights (SDR) allocation to the countries most in need. At potentially up to $100 billion in size, the proposed effort would further support health needs – including vaccinations – and help enable greener, more robust economic recoveries in vulnerable countries, and promote a more balanced, sustained, and inclusive global recovery.
The White House said that more details will be included in the G7 Leaders’ Communique.
The three-day G7 summit, attended by leaders of the world’s seven largest so-called advanced economies, got off to a start in Cornwall, in south-west England, Friday.
Global coronavirus vaccinations and climate change are due to be the focus of the summit. The leaders will also touch upon the global economy, infrastructure, ransomware attacks, and cyber security. Most of the discussions over the three days will take place behind closed doors, under tight security.
Ahead of the summit, U.S. President Joe Biden and U.K. Prime Minister Boris Johnson had their first face-to-face meeting Thursday.
The two leaders set out a global vision in a new Atlantic Charter to deepen cooperation in democracy and human rights, defense and security, science and innovation, and economic prosperity, with renewed joint efforts to tackle the challenges posed by climate change, biodiversity loss, and emerging health threats.
This is the first G7 Summit held since the outbreak of the COVID-19 pandemic, and attended by Joe Biden.
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