The Group of Seven major economies are close to agreement on a corporate tax of multinational companies, paving the way for a global deal later in the year, the Financial Times reported on Monday.
A G7 pact could be sealed as early as Friday after progress was made among top officials in recent days, the paper stated, citing unnamed officials.
The group is holding a virtual meeting of finance ministers on Friday and an in-person meeting on June 4 – 5 in London where the central elements of a deal can be agreed, the officials said.
Any deal would hit the ability of companies to shift profits to low tax jurisdictions and ensuring that US digital giants such as Amazon, Facebook and Google paid more tax in the countries where they made sales.
If a deal can be agreed informally by finance ministers, G7 leaders could formally sign it at their summit next month, presenting a plan to the 135 nations negotiating under the “inclusive framework” at the Organisation for Economic Co-operation and Development (OECD), the FT reported.
The US has been pushing hard for the G7 to reach its own consensus as a way of spurring the OECD talks so a final deal can be reached in the coming months.
It last week scaled back ambitions on a global minimum corporate tax rate, lowering it to an effective rate of 15% from 21% to make it more palatable internationally.
There was also US reassurance to other countries that it would allow a slice of the global profits of the largest multinationals to be taxed based on the location of sales, and the two “pillars” of the deal are inseparable.
France and the UK have put more weight on the location of tax payments. International officials describe the UK as having been “difficult” in the negotiations, the paper added.
The G7 does not have a formal role in the process, but the nations of the US, Japan, Germany, the UK, France, Italy and Canada make a powerful bloc in other forums.
If a deal can be agreed informally by finance ministers, the G7 leaders could formally sign it off at the Cornwall summit on June 11 -13, presenting a plan to the 135 nations negotiating under the “inclusive framework” at the OECD.
The G20 has said it wants to strike a deal by the summer and the progress at the G7 makes this ambitious timetable still just possible, although officials close to the talks think that October might be a more realistic date for a full international agreement.
