The German finance minister called the deal historic, and the British praised it: at their meeting, the G7 finance ministers set a lower tax rate for companies.

Federal Finance Minister Olaf Scholes is pleased with the outcome of the G7 meeting. The agreement on the minimum tax rate is good news for tax justice and solidarity, and bad news for tax authorities around the world. “This is a historic breakthrough. The competition for tax cuts and waivers is over,” he said. We have a good opportunity to agree on minimum taxation rules for companies around the world. “That’s what I’ve been working on for years.”

British Treasury Secretary Ishi Shi Sunak also described the result as historic: “Today – after years of negotiations – I am pleased to announce that the G7 finance ministers have reached a historic agreement to reform the tax system.”

The minimum tax rate is 15 percent

The deal is important but only the first step. Scholes said the Organization for Economic Co-operation and Development (OECD) will handle the decisions in the coming weeks. A meeting of G20 finance ministers and representatives from India, Brazil and China will be at the table. Sunak said the minimum tax rate will also be handled this round.

The ministers decided that the minimum tax rate would be 15 per cent. In addition, companies must pay taxes on the sales they generate. So far, corporates have been able to turn a profit and avoid tax evasion in countries with higher tax rates. French Finance Minister Bruno Le Meyer had expected the tax rate to rise to more than 15 percent.

Ireland’s finance minister is reluctant

However, experts believe that the high rate is unrealistic. Even in the European Union, there are countries that attract corporations at low rates, such as Luxembourg, the Netherlands and Ireland. The Irish Secretary of the Treasury was reluctant after the deal. He said more than 140 countries were involved in the OECD’s global tax reform process. Any agreement must meet the interests of countries large and small. Ireland’s tax rate is 12.5 percent.

U.S. Treasury Secretary Janet Yellen hopes the reform will have a positive impact on the global economy, as companies will be able to compete and invest equally. Facebook has also welcomed the deal on Twitter – meaning the company will soon have to pay more taxes. According to a study by the European Union, the global minimum 15 percent tax would pour into the treasury an additional 50 billion euros.

Opposition politicians in Berlin, for example, Fabio de Maci, deputy leader of the Left in the Bundestag, have been critical. He complained that the 15 per cent tax rate was too low.

G7 finance ministers agree on minimum tax

Christoph Brussel, ARD London, 5.6.2021, 5:22 pm