G7 to Discuss Global Corporate Tax Next Week

Recent calls for advanced economies to agree on a minimum global corporate tax rate are making more progress with the G7 group representatives promising to reach an agreement on the issue soon.

The G7 finance ministers are expected to pledge support to economic recovery from the Coronavirus pandemic, as well as agreeing on a global corporate tax in July during their meeting that will take place on June 4-5 in London, Reuters first reported citing a draft communique on Monday.

Another area that will be tackled in the meeting is ensuring that once economic recovery is achieved, the focus will shift towards ensuring the long-term sustainability of public finances. This could include easing stimulus measures and relief packages, as markets and businesses return to their normal pre-pandemic activity levels.

This should not be interpreted as a plan to withdraw support earlier than expected, with a clear continuous commitment towards stimulating growth and creating job opportunities.  

The pandemic is said to have provided an opportunity to work collectively on issues where the world is yet to see noticeable progress in addressing, such as inequalities and climate risks.

The G7 is set to approach the issues of sustainability as a way of preventing another crisis in the future.

Accordingly, setting a global minimum corporate tax is believed to be a tool to make sure that major multinational corporations pay their fair share.

Recently, the European Union (EU) witnessed calls for amending the way tech giants such as Google, Facebook, and Amazon are regulated, based on suggestions by France and the Netherlands.

The proposed tax reforms would provide an opportunity to avoid large companies not paying taxes despite making huge revenues due to tax loopholes or setting up their headquarters in tax havens.

Earlier, the U.S. reportedly adjusted its suggestion for the minimum tax rate to 15% in May from 21% in April.

The July meeting will gather G20 finance ministers and central bank governors, allowing discussing the aforementioned issues as well as the rollout of vaccines worldwide and ensuring a smooth global economic recovery.

The International Monetary Fund will be asked to play its role and provide the needed funds for vaccines, with the private sector participation.

Furthermore, mandatory climate financial disclosures and carbon taxes could be tools to ensure protecting the environment and biodiversity and moving towards a green economy by ensuring sustainability.