G7 finance ministers agree on global minimum tax

The Group of 7’s (G7) finance ministers have agreed on a global minimum tax, supporting ongoing efforts at the OECD. The agreement signifies an important milestone in negotiations on how to tax the digital economy.

The G7 finance ministers’ communique explains: ‘We strongly support the efforts underway through the G20/OECD Inclusive Framework to address the tax challenges arising from globalisation and the digitalisation of the economy and to adopt a global minimum tax… We (also) commit to a global minimum tax of at least 15% on a country by country basis. We agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.’

With regards to the allocation of taxes, the ministers agreed that market countries are ‘awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises.’ 

The next step is for the G7 finance ministers’ commitment to be endorsed by the leaders of the G7, who are scheduled to meet on 11–13 June in Cornwall, UK.