G7 agreement on minimum tax: “A historic breakthrough”

Status: 05.06.2021 6:06 p.m.

The German finance minister calls the agreement “historic”, and the British one is also full of praise: At their meeting, the G7 finance ministers decided on a minimum tax rate for companies.

From Christoph Prössl,
ARD-Studio London

Federal Finance Minister Olaf Scholz was satisfied with the result of the G7 meeting. The agreement on a minimum tax rate is very good news for tax justice and solidarity and bad news for tax havens around the world. “This is a great historic breakthrough. The era of tax-cutting and dumping competition is over,” he said. There is a good chance that we will finally agree on minimum taxation rules for companies worldwide. “And that’s something I’ve worked on for many years.”

Christoph Prössl
ARD-Studio London

British Treasury Secretary Rishi Sunak also called the result historic: “I am very pleased to announce that today – after years of discussion – the G7 finance ministers have finally reached an historic agreement to reform the taxation system.”

G7 finance ministers agree on key points for a global minimum tax rate

Vassili Golod, ARD London, daily news 8 p.m., 5 June 2021

Minimum tax rate of 15 percent

The agreement is just a first step, albeit an important one. In the coming weeks, the Organization for Economic Cooperation and Development (OECD) will deal with the decisions, said Scholz. There is also a meeting of the G20 finance ministers, at which the representatives of India, Brazil and China will also sit at the table. This round will also deal with the minimum tax rate, said Sunak.

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The ministers have decided on a minimum tax rate of 15 percent. In addition, companies should pay tax on their sales where they generate them. So far, corporations have been able to shift profits and thus avoid taxation in countries with higher tax rates. France’s Finance Minister Bruno Le Maire had hoped for a tax rate higher than 15 percent.

Ireland’s finance minister reluctant

However, experts consider a higher rate to be unrealistic. Even in the EU there are countries that attract corporations with low rates, such as Luxembourg, the Netherlands and Ireland. The Irish Treasury Secretary sounded reluctant after the deal. Almost 140 countries are involved in the OECD’s global tax reform process, he said. Any agreement must serve the interests of large and small countries. Ireland has a tax rate of 12.5 percent.

US Treasury Secretary Janet Yellen expects the reform to have a positive effect on the global economy because companies can compete and invest on an equal footing. Facebook also welcomed the agreement on Twitter – also admitting that it could mean that the company will soon have to pay more taxes. According to a study by the European Union, a global minimum tax of 15 percent would flush an additional 50 billion euros into the coffers.

Politicians of the opposition in Berlin, for example the deputy leader of the Left in the Bundestag, Fabio de Masi, expressed themselves critically. He complained that the tax rate of 15 percent was set very low.

G7 finance ministers agree on minimum tax

Christoph Prössl, ARD London, 5.6.2021, 5:22 p.m.

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