By Doug Connolly, MNE Tax
The G7 group of leading economies is getting close to an agreement to shake up the global rules on the taxation of multinational businesses, according to May 24 articles published in the Financial Times (subscription required) and Irish Times. Following advancements in G7 talks this week, the articles report that an agreement could be reached as early as this Friday.
US Treasury Secretary Janet Yellen is meeting virtually with her finance minister counterparts in the G7 in advance of in-person meetings to be held from June 4–5 in London. Any deal reached this week within the G7 – Canada, France, Germany, Italy, Japan, the UK, and the US – could presumably be formalized in London next week.
Efforts to re-work global tax rules under the OECD’s Pillar 1, concerning the allocation of taxing rights, and under the OECD’s Pillar 2, concerning establishing a global minimum corporate tax, will likely require a broader consensus of nations than the G7. Such broader discussions are taking place in the context of the OECD’s Inclusive Framework, which consists of 139 countries. Nonetheless, a G7 agreement, if reached, would presumably carry significant clout.
Negotiations on Pillar 1 and Pillar 2 are also expected to move forward at meetings scheduled in July between the finance ministers of the G20, which would allow an opportunity to create a broader consensus with additional nations, including Australia, Brazil, China, India, and South Korea. Any G7 agreement would likely be the starting point for those negotiations.
The announcement on progress in negotiations within the G7 this week followed a US Treasury announcement last week stating that the US would agree to a 15% global minimum tax rate. Officials from several G7 nations hailed the move, calling it significant progress towards compromise, but the acceptability of such an agreement to smaller countries, such as Ireland, remains to be seen.
Doug Connolly
Doug Connolly is Editor-in-Chief of MNE Tax. He has more than 10 years of experience covering tax legal developments, previously working with both a Big Four firm and a leading legal publisher. He holds a law degree from American University Washington College of Law.
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