Group of Seven leaders on Friday are expected to endorse a minimum global tax rate of at least 15 percent, formalizing what finance ministers from Canada, France, Germany, Italy, Japan, Britain and the United States agreed to last weekend.
The White House heralded the agreement as critical to building an “equitable” tax system and to ending the so-called “race to the bottom” — countries competing over who can offer the lowest tax rates to big corporations — that often comes at the expense of workers.
“By making big multinational corporations pay their fair share and raising resources to fund priorities for domestic renewal — such as infrastructure, childcare, affordable housing and education — a global corporate minimum tax is a key part of our efforts to deliver a foreign policy for the middle class, and will help support working families everywhere,” the White House said in a statement Friday.
The White House said the deal also “paves the way” for the removal of digital service taxes, which some countries have enacted on large companies that make money online in those countries, even if they do not have physical headquarters there.
European countries had pushed to levy taxes on large tech companies such as Apple and Amazon, but the United States did not want tech companies singled out.
As a compromise, in place of digital service taxes, taxing rights would be reallocated to places where “the largest and most profitable multinational corporations” are doing business and making money, according to the White House.
“This is an important principle for the United States, and will ensure that big multinational companies across the economy will pay a little more in the places where they operate, whether or not they have their headquarters there,” the White House said.
G-7 leaders will also discuss Friday boosting the reserves of the International Monetary Fund by up to $100 billion to support the neediest countries as they recover from the coronavirus pandemic, the White House said.