Keywords: G7, Tax plan, Large corporations, Tech companies

During the most recent G7 summit, the G7 countries are nearing an agreement on imposing taxes on large corporations[1]. If these plans would be executed speculations would be that a minimum tax rate of 15% would be charged in certain situations[2]. Such an agreement will limit the ability of companies to pass on profits to countries with a more lenient tax regime, thus avoiding (corporate) taxes. If the countries would come to an agreement, it would pave the way for a global deal on corporate taxes later this year.

The G7 members are among the countries with the largest economies in the world. An agreement among the countries would be a prerequisite for a broader deal. An agreement with the OECD countries would likely lead to the biggest change in international corporate taxation in a century. What these changes will mean in concrete terms remains to be seen in the future. Among other things, it would force large U.S. tech companies to pay taxes in countries where their sales are also made, think of companies like Google, Apple, Amazon etc.

Some countries within the G7 like Germany and Italy, for example, are outspoken supporters of a global minimum tax. France and the United Kingdom attach more importance to where the tax is paid.

Although the G7 has no formal role in the process of reaching a broader agreement. It may well bring about an agreement among the major countries, namely the U.S., Japan, Germany, the U.K., France, Italy and Canada. And this does have an emphatic influence on further decisions. The countries agreement could be submitted next month to the 135 countries negotiating at the OECD.