G7: a breakthrough for global tax justice?

The finance ministers of the G7 countries agreed on a global minimum corporate tax rate of 15 percent on Saturday. Under the deal, multinationals will pay more taxes in the country where they generate turnover rather than in the country where they have their headquarters, as has been the case so far. Participants at the meeting celebrated the decision as a historic reform. Commentators acknowledge this, but some doubt that it will truly curb tax avoidance.

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The Guardian (GB) /

A step in the right direction

The Guardian is cautiously optimistic:

“The devil will be in the eventual detail. The 15 percent minimum is not much above the low corporation tax rates currently set in countries such as Ireland and Switzerland, and falls a long way short of the 21 percent rate first pressed for by Joe Biden, the US president. Nevertheless, an important principle of cooperation between states has been established, restoring a sense of political control over the manoeuvres of the global business elite. The sudden momentum for change came about through a combination of factors. The debts piled up by governments during the Covid pandemic, combined with a lockdown boom in profits for big tech companies, concentrated minds in Europe.”

La Repubblica (IT) /

A rejection of populism and egoism

For La Repubblica, the decision has a signal effect that goes far beyond taxation:

“Technically speaking, the agreement reached on Saturday by the G7 finance ministers on the taxation of multinationals is just one piece of the puzzle on how to tax big companies and condemn tax havens. ... But in a broader sense, the agreement reached by the seven big players in the global economy is a powerful rejection of the populist, egoistic and hegemonic politics that have characterised international relations in recent years.”

De Volkskrant (NL) /

Multinationals barely need to adapt

The decision is a breakthrough but doesn't pose a major threat to multinationals, says De Volkskrant:

“First there's the minimum percentage of 15 percent: that's low. ... Then there is the distribution of the expected yield, which will probably also lead to a hefty hangover. The G7 agreement says that 20 percent of the corporate income tax will be distributed among the countries concerned, but the remaining 80 percent can be left where it suits them best, just as it is now. ... If all countries and clubs adopt the agreement in autumn, it will still be a few years before the 15 percent corporate tax actually comes into effect and is levied. The initial reactions from Amazon, Google and Facebook thus indicate their satisfaction.”

taz, die tageszeitung (DE) /

Fifteen percent is too low

For taz, the reform is a stale compromise:

“The tax rate of 15 percent is clearly too low. France may have pushed through an 'at least', but there is a great risk that the new global tax will act as an absolution and convey the impression worldwide that companies cannot be expected to pay more. US Treasury Secretary Janet Yellen had proposed a tax rate of 21 per cent. That would have been much better.”

Mediapart (FR) /

Virtually written in stone

Instead of becoming a minimum threshold, the 15 percent rate threatens to become the global standard, Mediapart also warns:

“Many organisations already fear that the 15 percent rate will become the norm in all countries, as governments will be obliged to adjust to this figure one by one and forgo indispensable tax revenues. The danger is particularly great for numerous emerging economies that secure the majority of their budget from mining and mineral extraction. ... The possibility of being able to change the rate is extremely small. Because in agreeing to announce this figure at the very first meeting, the G7 finance ministers have in a sense written it in stone. ... The next talks will be devoted to fixing the modalities.”

De Standaard (BE) /

Politicians once more in control

The agreement is a historic breakthrough despite the criticism, De Standaard writes:

“That's it for 'America first', the West is back in business, multilateralism is the order of the day. Governments have taken back the reins from the multinationals, which are lobbying like crazy. This agreement could also unite the European Union. The 27 member states are groaning under the weight of competing with each other on taxes and the need for unanimity has blocked all progress so far. ... Now we have the prospect of a more honest tax and distribution system. In these times of rising populism, this is not a superfluous luxury.”