Rich nations ‘millimetre away’ from tech tax deal

A global agreement to end the “race to the bottom” on corporate taxation is within sight, according to the French and German finance ministers.

France’s Bruno le Maire told the BBC the G7 club of rich nations were “just one millimetre away from a historic agreement” on a global minimum rate.

He urged low tax states like Ireland to back a deal which would target tech giants such as Amazon and Microsoft.

The German finance minister said a 15% rate would help pay back Covid debt

Tax on big tech and multi-nationals has been a source of friction between the US and fellow G7 countries such as the UK.

German finance minister Olaf Scholz said it was important to stop the world’s biggest companies from dodging tax.

He said it was “absolutely necessary” to reach a deal in order to “get out of this race to the bottom we see with taxes today…especially after the Covid crisis and all the money we spent to defend the health of the people, and to defend the economy.”

Mr Le Maire also urged Ireland, which has one of the lowest corporate tax rates in the European Union, at 12.5%, to get “on board”.

He added: “European countries, that in the past, opposed this new international tax system, must understand that they have to give the agreement to this major breakthrough”.

‘Starting points and sticking points’

Both ministers said agreement on a minimum rate remained a sticking point.

Mr Le Maire said he saw the 15% rate as a “starting point”.

He said: “If it can be higher, it is better to have a higher rate than 15%.”

However, Mr Scholz suggested that 15% would be an effective starting point that would mark a “turning point” after years of going in the other direction.

It came after UK Chancellor Rishi Sunak says he was “confident” of reaching a global agreement on digital taxation ahead of a meeting of world finance leaders.

Finance minsters will also discuss climate change at the two day meeting which starts in London on Friday.

Ahead of the G7 talks, starting in London on Friday, Mr Le Maire and Mr Scholz along with their counterparts in Italy and Spain co-signed a letter urging an agreement on an international tax system “fit for the 21st Century”.

In a letter to The Guardian, they wrote: “Introducing this fairer and more efficient international tax system was already a priority before the current economic crisis, and it will be all the more necessary coming out of it.” (BBC)