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G7 Leaders to Raise Corporate Taxes on Tech Giants

Leaders of the G7 club of rich countries are finalizing plans to introduce higher corporate taxes on tech companies across all member states. This comes as the mounting debts from the Covid-19 pandemic drives leaders in these countries to seek out more ways to increase revenue. Fewer alternatives present as much potentials as corporate taxes, with most of these rich countries being a tax haven for corporations.

As the stakes are getting higher, global leaders looking to “get out of this race to the bottom we see with taxes today…especially after the Covid crisis”, according to German Finance Minister Olaf Scholz.

France’s Bruno Le Maire disclosed during an interview with the BBC that the league of rich nations is now “just one millimeter away from a historic agreement” on a global minimum rate.

If successful, the new tax regime could see corporate taxes hiked to at least 15% – much higher than what companies like Microsoft and Amazon currently enjoy in low-tax countries like Ireland.

Scholz is backing the 15% minimum rate and Le Maire is calling for low tax states like Ireland to ‘get on board’ the deal.

Both Scholz and Le Maire co-signed a letter together with their counterparts from Italy and Spain to set the tone ahead of the G7 talks, describing the agreement as being “fit for the 21st Century”.

Corporate taxes is currently a hot-button issue among the G7 countries. Recently, the US announced it would introduce tariff hikes of about $2 billion on certain imports from the UK in retaliation for hiked tax regimen imposed on big US tech firms. However, it’s putting that plan on hold for now – at least until the end of talks at the next G7 summit.

All parties seem to have agreed that large corporations that benefitted the most from the pandemic should be obliged to do more to help in rebuilding the economies they generate revenue from. This consensus comes in the wake of a recent report showing that a Microsoft subsidiary based in Ireland paid zero corporate taxes on a $315 billion profit it generated last year.

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