G7 take big step to recover tax but just for themselves

5 June 2021 by https://www.taxjustice.net/

Responding to the G7’s announcement on the global minimum corporate tax rate, Alex Cobham, chief executive at the Tax Justice Network, said:

“The G7 has decided to finally move the international tax system into the 21st century but only enough to shamelessly benefit just themselves, leaving the rest of the world behind. The world’s eyes were on the G7, hoping that in the face of this global pandemic they would throw their weight behind a new tax system that would bring back home to all countries the billions in corporate tax they were robbed of and urgently need to rebuild and recover. Instead, the G7 finance ministers are proposing to follow OECD proposals that would ensure the G7 themselves take the lion’s share of any new tax revenues – which will in any case be limited by their lack of ambition.

“The G7 made it clear that they know the race to the bottom has been damaging economies and people’s lives for decades. By settling for anything less than a 25% tax rate, the G7 is telling their citizens and the world that they’re willing to keep the race to the to bottom alive and kicking. Rarely does the opportunity to better the lives of billions of people in a single stroke come by but when history came knocking today, the leaders of the richest countries in the world turned their back on it.

“Our modelling1 shows that a 25% minimum effective tax rate could raise $780bn in additional revenues worldwide – and still leave multinationals with three quarters of their gross profits. Countries outside the G7 could receive $355 billion under the fairer approach we’ve proposed. If the G7 pushes ahead with a 15% minimum rate under the deeply unequal OECD approach, they will leave barely more than $100 billion for other countries – while taking $170 billion just for themselves.

“This cannot stand. The rest of the world must object absolutely. The G20 group, and the Inclusive Framework, may rightly feel entirely disenfranchised but they can take back the power by challenging this openly, pushing for a higher rate and insisting on a balanced distribution of recovered tax, like that offered by the METRproposal.

“Even the G7 and OECD recognise that the international tax rules are unfit for purpose. The disproportionate power exercised by these rich countries’ clubs today shows that the way international tax rules are determined, too, is unfit for purpose. It is now well past time for international tax rules to be set democratically at the UN, starting with a UN tax convention.”

Contact the press team: media [@] taxjustice [.] net

Notes to editor

  1. Our analysis of how much each country can recover in underpaid corporate tax under a global minimum corporate tax applied under the OECD and METR proposals. You can view the country figures in this table here. Provided below is a table presenting these country figures grouped into two categories: G7 countries and non-G7 countries.
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  1. An explanation of the METR (Minimum Effective Tax Rate) proposal by Sol Picciotto, Coordinator of the BEPS Monitoring Group, emeritus professor of law at the University of Lancaster in the UK and Tax Justice Network senior adviser, is available here