12 July 2021

Global minimum corporate tax rate advances at G20 level

Philanthropy Advocacy takes stock of the recent G7 agreement to back a new global minimum tax rate of at least 15 percent applicable to companies regardless of where they are based. The agreement also imposes an additional tax on some of the largest multinational companies, applicable to technology giants like Amazon, Facebook and Google, but also other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation. The G7, represented by the United Kingdom, Canada, France, Germany, Italy, Japan and the United States reached this agreement during their summit in June 2021.

The abovementioned G7 agreement paved the way for a deal within the OECD framework on 1 July, where no less than 130 countries agreed on taxation of multinationals’ profits and the setting of a global minimum corporate tax rate of at least 15%.

On Saturday 10 July, the G20 finance ministers and central bank governors endorsed the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax. They have called on the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing to finalise the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by their next meeting in October.

The European Union follows closely the international developments as to link them to their recent Communication on Business Taxation for the 21st Century, which includes the Business in Europe: Framework for Income Taxation (BEFIT).

Philanthropy Advocacy contributed to consultations undertaken by the OECD end of last year and is following the developments with the overall aim to ensure that efforts at the international level do take the perspective of philanthropic actions into account.