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The broader G20 bloc wants to strike a deal based on this uniform tax rate by the summer, with the progress made by the G7 sighted as a key catalyst for this move.
The G7 or Group of Seven of the world’s advanced economies is on the brink of agreeing on a broad and unifying taxation deal for the top multinational companies. The bloc comprising of the United States of America (USA), United Kingdom, Japan, France, Italy, Germany, and Canada are notably in advanced talks where top officials are in tune with America’s 15% proposed tax levy.
While the Biden administration is keen on ticking all the boxes as it relates to the tax overhaul in the nation, other world governments are not slacking on boosting their tax revenues. These funds are vital to the rebuilding efforts as normal economic activities are gradually returning to pre-pandemic levels. While fronting the uniform G7 tax agreement, the US has made some concessions by lowering its initial proposition from 21% to gain massive support.
As reported by the Financial Times, the deal, if passed will be pushed forth for approval by the OECD, when the group of 37 member countries meets in the coming months. With the influence of the G7, getting this taxation deal across the board may be relatively easy.
The overall approach to fix a uniform tax deal will affect most of the world’s largest firms that operate globally like the Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOGL), and Amazon.com Inc (NASDAQ: AMZN) amongst others. The levied taxation will prevent these multinationals from shifting their bases of operations to supposedly tax safe haven jurisdictions.
Timeline for the G7 Taxation Deal to Be Activated
The proposed taxation deal by the G7 may be signed off as early as next week. According to sources close to the matter, the group will be holding a virtual meeting on Friday and an in-person meeting on June 4th and 5th in London where the core details of a deal can be agreed upon.
While Germany and Italy, according to the report are proponents of defining uniformed tax levels for corporations, the United Kingdom and France are dragging feet-at least-until the details of the sales location as proposed by the US are clarified. In a bid to push forth its proposal, American officials had noted that the taxes can be levied based on the areas where the companies of interest make their sales. This obvious discrepancy is, however, not expected to shift the overall focus on the proposed deal.
The world is closer than ever before to a global minimum tax. Great to hear the positive reception to our proposal and thanks to @SecYellen and our partners all around the world for their work on this. This is what it looks like to lead the world to end the race to the bottom.
— Jake Sullivan (@JakeSullivan46) May 22, 2021
The broader G20 bloc wants to strike a deal based on this uniform tax rate by the summer, with the progress made by the G7 sighted as a key catalyst for this move according to the Financial Times report.