Rishi Sunak announced that a “historic agreement” had been reached on reforming the global tax system.
The deal will set a global base rate for corporate tax and reform the tax system for online giants.
After two days of talks in London with the G7 finance ministers, including colleagues from the US and Germany, Rishi Sunak announced that they had committed to a corporate tax rate of “at least 15%”.
Changes are also being made to ensure that large companies, especially those with a strong online presence, pay taxes in the countries where they have sales, not just where they have an operational base.
Following a meeting of G7 finance ministers in London, the Chancellor said: “I am pleased to announce that, after years of discussion, the G7 finance ministers today reached an historic agreement on the reform of the global tax system.
“To make it fit for the global digital age, but above all to make sure it is fair, for the right companies to pay the right taxes in the right places, and that is a huge win for UK taxpayers.”
In meeting with G7 finance ministers, the Chancellor defended the decision not to push for a higher global corporate tax rate after US President Joe Biden originally argued that it should be 21%.
Rishi Sunak told London broadcasters, “I would say a few things. Firstly, the agreement reached here today says at least 15% and secondly, it is worth taking a step back.
“This has been discussed for almost a decade.
“And here today, for the first time, we have actually agreed on the concrete principles of what these reforms should look like, and that is huge progress.”
When asked if he would tie his hands with a minimum rate, Mr. Sunak replied, “I think the UK public wants to know that the tax system is fair, they want to know that there is a level playing field – do they? People operate in tax havens or whether large, especially online companies, cannot pay taxes in the right places, that is what they want to tackle.
“And this agreement gives us the opportunity to do so, and it was agreed among the G7 colleagues. Once we expand it and roll it out globally, it will be a huge win for UK taxpayers. “