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UK says tech firms must pay fair share of tax

Image credit: Piotr Adamowicz/Dreamstime

Britain has said that any global deal on a minimum corporate tax rate must ensure that large tech companies pay their fair share of tax. The statement comes before it hosts an online meeting of G7 finance ministers and central bankers.

Last week, the US proposed governments should tax multinational companies’ profits at a minimum rate of 15 per cent, less than an initial proposal of 21 per cent. The proposal has drawn public support from Germany and France.

But Britain, which is chairing meetings of the Group of Seven rich nations this year, has revealed they are being more cautious. Chancellor of the Exchequer Rishi Sunak is keen that large tech firms with overseas headquarters pay more tax in the UK.

“Our consistent position has been that it matters where tax is paid, and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities,” a British finance ministry source said. “We welcome the US’s renewed commitment to tackling the issue and agree that minimum taxes might help to ensure businesses pay tax – as long as they are part of that package approach.”

French finance minister Bruno Le Maire called for countries to reach an agreement on a minimum tax rate next week when Sunak will host an in-person meeting of finance ministers in London from 4 to 5 June.

“At London’s G7, the world’s most powerful economies must say: we agree on a new international tax, including a digital tax and a minimum tax. This will give a firm push so that at the G20 in Venice, in mid-July, we can reach a deal,” Le Maire told a French radio station.

Tax is not due to be discussed in depth at this Friday’s (28 May) online meeting of G7 finance ministers and central bankers. A draft agenda instead will focus on the global economy, reducing greenhouse gas emissions, and digital payment technology such as central bank digital currencies.

Last year, Le Maire warned the US government against any retaliation following an introduction of a digital services tax targeting large American tech companies.

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