G7 meets to broker global tax deal

Finance ministers from the G7 group of rich nations are meeting in London for two days of talks aimed at moving closer to a global deal to raise more tax from the likes of Google, Facebook and Amazon.

The gathering on Friday, chaired by British finance minister Rishi Sunak, will be the first time all seven ministers will meet face-to-face since the start of the coronavirus pandemic.

US President Joe Biden’s willingness to raise taxes on large businesses also creates more chance of an international consensus than under his predecessor Donald Trump.

“I’m hugely optimistic that we will deliver some concrete outcomes this weekend,” Sunak said in a statement on Thursday.

Sunak stressed the importance of his fellow ministers from the United States, Japan, Germany, France, Italy and Canada being able to meet face-to-face in Lancaster House, an ornate 19th-century mansion almost next door to Buckingham Palace.

“You need to be round a table, openly, candidly talking through things,” Sunak told Reuters in an interview this week.

Due to COVID restrictions, ministerial delegations have been cut down and there are few travelling journalists.

But the bigger challenge remains reaching an agreement on tax reform that could then be presented to a broader group of countries, the G20, at a summit in Venice in July.

French finance minister Bruno Le Maire said an agreement would be a “decisive step” that he thought was “within reach”.

However, Japanese finance minister Taro Aso said he did not expect agreement this week on a specific minimum tax rate.

The US Treasury expects a fuller agreement to come when Biden and other heads of government meet at a secluded beach resort in southwest England on June 11-13.

The United States has proposed a minimum global corporate tax rate of at least 15 per cent. If a company paid tax somewhere with a lower rate, it would probably have to pay top-up taxes.

But just as important for Britain and many other countries is that companies pay more tax where they make their sales - not just where they book profits, or locate their headquarters.