The United States, Britain and different massive, wealthy nations reached a landmark deal on Saturday to squeeze extra money out of multinational corporations akin to Amazon and Google and cut back their incentive to shift earnings to low-tax offshore havens.

Hundreds of billions of {dollars} may circulation into the coffers of governments left cash-strapped by the coronavirus illness (Covid-19) pandemic after the G7 superior economies agreed to again a minimal international company tax fee of at the least 15%.

The resolution was taken on the assembly of G7 finance ministers in London.

British Treasury chief Rishi Sunak posted a Twitter thread the place he defined what the deal means. “Under the principles of the landmark reforms, the largest global firms with profit margins of at least 10% will be in scope – with 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries where they make sales,” he mentioned in one of many tweets.

He additionally mentioned that the transfer will create a extra level-playing discipline for UK companies and cracking down on tax avoidance.

US Treasury Secretary Janet Yellen mentioned the settlement “provides tremendous momentum” for reaching a worldwide deal that “would end the race-to-the-bottom in corporate taxation and ensure fairness for the middle class and working people in the U.S. and around the world.”

The assembly of finance ministers got here forward of an annual summit of G7 leaders scheduled for June 11-13 in Cornwall, England.

“Signaling that there is consensus around some of the key features of what’s being discussed globally was really, really important so they have the momentum to go to the next phase of this with the G-20,” mentioned Manal Corwin, a tax principal at skilled companies agency KPMG and a former Treasury Department official.

Part of the settlement Saturday is that different international locations would repeal their unilateral digital taxes in favour of a worldwide settlement.

The Group of seven is an off-the-cuff discussion board amongst Canada, France, Germany, Italy, Japan, the UK and the United States. European Union representatives additionally attend. Its choices are usually not legally binding, however leaders can use the discussion board to exert political affect.

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