Today, the G7 Finance Ministers issued a communiqué announcing their joint agreement on new global tax rules, including a global minimum corporate tax rate and a special new tax on some of the world’s largest corporations.

In response to the G7 agreement, Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad), said:

“We have three overall concerns with the new global tax measures that the G7 countries are outlining. In essence, they are not fair, they are not ambitious, and there is a high risk they will lead to a more complex and ineffective tax system.”

Ryding also expressed strong concerns about the way the G7 is trying to decide what the global corporate tax system should look like.

“The negotiation about new global tax rules belongs at the United Nations, where all countries can participate on an equal footing, rather than at a small rich countries’ club like the G7.”

Commenting on the content of the agreement, Ryding said:

“The G7 deal is anything but ambitious, and spells out a deeply worrying direction for corporate taxation in the future. A global minimum corporate tax rate of 15 per cent will just mean that instead of racing to the bottom, the world’s corporate tax rates will race to the minimum. But the fact remains that corporate tax rates will most likely keep racing down at a point in time where we are in a global crisis and desperately need multinational corporations to pay their share of tax. At the same time, we have yet to see whether this minimum rate will really be effective – that depends on how the rules will be designed.

“The agreement is also unfair – especially towards the world’s poorest countries. When you look at how the G7 want to split the global tax pie, it becomes very clear that this deal only reflects the interests of the world’s largest and richest countries. The G7 deal suggests an approach that would result in tax income for countries that are home to the headquarters of multinational corporations, as well as large amounts of consumers. This would be deeply problematic for the world’s poorest countries, which do not have many corporate headquarters or consumers, but instead, for example, have large amounts of employees.

“At the same time, the G7 deal also risks increasing the complexity and ineffectiveness of the global corporate tax system. Instead of abolishing the failed transfer pricing system, the deal suggests adding an extra special tax that will only be applied to a limited number of very large corporations.

“It is time for the world’s richest countries to stop trying to set global tax rules in forums where developing countries are not able to participate on an equal footing. The G7, G20 and OECD’s Inclusive Framework are all examples of clubs dominated by the interests of wealthy countries. We will not get a fair and truly global deal before the world’s poorest countries are able to participate on an equal footing. And we will not be able to fix the global corporate tax system unless governments become much more ambitious than what we have seen from the G7 today.”

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: +32 486356814/ [email protected]

Notes to editors:

• Earlier this week, EU negotiators also reached a political deal on a new EU directive that has public country by country reporting in its name, but not in its content. You can read our reaction to this
• Developing countries such as the African Group at the United Nations have been calling for a new UN Tax Convention and an intergovernmental UN tax negotiation to be initiated. In February 2021, this call was reinforced by a new report from a High-level Panel known as the FACTI Panel. You can read our reaction to this here.