G7 leaders will endorse proposed global minimum corporate tax, White House says

By supporting the move, major economies are aiming to discourage multinationals from shifting profits to low-tax countries

(L-R) Canada's Prime Minister Justin Trudeau, President of the European Council Charles Michel, US President Joe Biden, Japan's Prime Minister Yoshihide Suga, Britain's Prime Minister Boris Johnson, Italy's Prime minister Mario Draghi, France's President Emmanuel Macron, President of the European Commission Ursula von der Leyen and Germany's Chancellor Angela Merkel pose for the family photo at the start of the G7 summit in Carbis Bay, Cornwall on June 11, 2021. G7 leaders from Canada, France, Germany, Italy, Japan, the UK and the United States meet this weekend for the first time in nearly two years, for three-day talks in Carbis Bay, Cornwall. - 
 / AFP / Ludovic MARIN
Powered by automated translation

G7 leaders meeting in Britain will endorse US President Joe Biden's proposal for global minimum tax of at least 15 per cent on corporations, White House national security adviser Jake Sullivan said on Twitter on Friday.

The US Treasury in May proposed a global minimum corporate tax of at least 15 per cent to try to end a downward spiral of corporate tax rates.

"America is rallying the world to make big multinational corporations pay their fair share so we can invest in our middle class at home," Mr Sullivan tweeted.

By supporting the move, major economies are aiming to discourage multinationals from shifting profits - and tax revenues - to low-tax countries regardless of where their sales are made.

Current global tax rules date back to the 1920s and struggle with multinational tech giants that sell services remotely and attribute much of their profits to intellectual property held in low-tax jurisdictions.

US tech giants such as Facebook and Amazon could benefit from the agreement to create a global minimum 15 per cent corporate tax rate if the final deal also scraps increasingly popular digital services taxes, according to industry lobbyists.

The decision had been expected after G7 finance officials backed a tax rate of at least 15 per cent during a meeting on June 5. The US Treasury has said the G7's endorsement will provide momentum for advancing negotiations towards a broader G20 finance meeting in July in Italy.

US Treasury Secretary Janet Yellen and her counterparts from Germany, Indonesia, Mexico, and South Africa backed the move in a column published on Wednesday by the Washington Post. They said they were confident that the global minimum tax rate could ultimately be pushed higher than 15 per cent, citing "the ambition of the discussions thus far".