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The Group of Seven top advanced economies are close to an accord on the corporate taxation of multinationals, paving the way for a global deal later in the year to create new rules for the imposition of levies on the world’s largest companies.
A G7 pact could be sealed as early as Friday after progress was made among top officials in recent days — and would be a powerful force and prerequisite for a deal in the formal negotiations taking place at the OECD in Paris and directed by the wider G20. An OECD agreement would probably lead to the largest shake-up in international corporate taxation for a century, severely curtailing the ability of companies to shift profits to low tax jurisdictions and ensuring that US digital giants paid more tax in the countries where they made sales.
Under the Biden administration, the US has been pushing hard for the G7 to reach its own consensus as a way of spurring the OECD talks so a final deal can be reached in the coming months. Recommended The FT ViewThe editorial board A good chance to reform global corporate taxation The US last week scaled back its ambitions on a global minimum corporate tax rate, lowering it from 21 per cent to an effective rate of 15 per cent to increase its appeal internationally. It also reassured other countries that it was serious in its offer to allow a slice of the global profits of the largest multinationals to be taxed based on the location of sales, and the two “pillars” of the deal are inseparable.
In recent weeks, the US has grown increasingly confident that it has most of the G7 on board with its plans, which built on blueprints drawn up by the OECD last year. Germany and Italy have been vocal supporters of a global minimum tax. Daniele Franco, the finance minister of Italy, which is chairing the G20, said on Friday that the latest US proposal was “another important step” and the prospects for a global deal on international tax reform were “now concrete”. France and the UK have put more weight on the location of tax payments. International officials describe the UK as having been “difficult” in the negotiations. ...
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