Minimum global tax rate: a positive step but concerns remain

The announcement by G7 finance ministers that agreement has been reached to introduce a minimum global tax rate on multinational corporations, and to make companies pay tax in the places where they make profits, is a positive step.

Concerns remain over the details, including what threshold of profit would trigger the tax, what percentage the tax would be, and whether the initiative will succeed in making big technology companies, in particular, begin to pay fair rates of tax.

Sharan Burrow, ITUC General Secretary, said: “This is a step in the right direction, but it doesn’t go far enough. A 15% tax is much less than most workers pay on their whole income. And it falls short of earlier indications of more than 20%, as well as being below the corporation tax rates of many countries.

“It also seems that the separate ’pillar 1’ tax agreement on large businesses would only kick in if profits exceed 10%. That threshold is too high and could also make it easier for companies, which have been cheating the public purse for years, to avoid paying their far share through ‘tax minimisation’ to keep getting away from paying up.

“It’s absolutely crucial that we properly finance recovery and resilience from this pandemic, vital public services and climate action. A digital tax is also on the agenda of the OECD and G20 G20 The Group of Twenty, or G20, is a forum for international cooperation on the most important aspects of the international economic and financial agenda. It brings together 19 countries and the European Union, which together represent around 90% of global GDP, 80% of global trade and two thirds of the world’s population. group of countries and must be supported.

“And with nearly 3,000 billionaires in the world, the time has come for wealth taxes as well as the unfinished business of financial transaction taxes, which would generate revenue and drive down speculation. In addition, action on the tax agenda must be complemented by action on competition policy. The dominance of companies like Amazon is stifling competition and opportunities for others, and they should be broken up.”

To read the TUAC response, see here.