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Tech giants and tax havens targeted by historic G7 deal

Stock MarketsJun 05, 2021 01:02PM ET
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2/2 © Reuters. FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak speaks at a meeting of finance ministers from across the G7 nations ahead of the G7 leaders' summit, at Lancaster House in London, Britain June 4, 2021. Stefan Rousseau/PA Wire/Pool via REUTERS 2/2

By David Milliken and Kate Holton

LONDON (Reuters) -The United States, Britain and other large, rich nations reached a landmark deal on Saturday to squeeze more money out of multinational companies such as Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL) and reduce their incentive to shift profits to low-tax offshore havens.

Hundreds of billions of dollars could flow into the coffers of governments left cash-strapped by the COVID-19 pandemic after the Group of Seven (G7) advanced economies agreed to back a minimum global corporate tax rate of at least 15%.

Facebook (NASDAQ:FB) said it expected it would have to pay more tax, in more countries, as a result of the deal, which comes after eight years of talks that gained fresh impetus in recent months after proposals from U.S. President Joe Biden's new administration.

"G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age," British finance minister Rishi Sunak said after chairing a two-day meeting in London.

The meeting, hosted at an ornate 19th-century mansion near Buckingham Palace in central London, was the first time finance ministers have met face-to-face since the start of the pandemic.

U.S. Treasury Secretary Janet Yellen said the "significant, unprecedented commitment" would end what she called a race to the bottom on global taxation.

German finance minister Olaf Scholz said the deal was "bad news for tax havens around the world".

Yellen also saw the G7 meeting as marking a return to multilateralism under Biden and a contrast to the approach of U.S. President Donald Trump, who alienated many U.S. allies.

"What I've seen during my time at this G7 is deep collaboration and a desire to coordinate and address a much broader range of global problems," she said.

Ministers also agreed to move towards making companies declare their environmental impact in a more standard way so investors can decided more easily whether to fund them, a key goal for Britain.

TAXING TIMES

Current global tax rules date back to the 1920s and struggle with multinational tech giants that sell services remotely and attribute much of their profits to intellectual property held in low-tax jurisdictions.

Nick Clegg, Facebook's vice-president for global affairs and a former British deputy prime minister, said: "We want the international tax reform process to succeed and recognise this could mean Facebook paying more tax, and in different places."

But Italy, which will seek wider international backing for the plans at a meeting of the G20 in Venice next month, said the proposals were not just aimed at U.S. firms.

Yellen said European countries would scrap existing digital services taxes which the United States says discriminate against U.S. businesses as the new global rules go into effect.

"There is broad agreement that these two things go hand in hand," she said.

Key details remain to be negotiated over the coming months. Saturday's agreement says only "the largest and most profitable multinational enterprises" would be affected.

European countries had been concerned that this could exclude Amazon - which has lower profit margins than most tech companies - but Yellen said she expected it would be included.

How tax revenues will be split is not finalised either, and any deal will also need to pass the U.S. Congress.

French Finance Minister Bruno Le Maire said he would push for a higher minimum tax, calling 15% "a starting point".

Some campaign groups also condemned what they saw as a lack of ambition. "They are setting the bar so low that companies can just step over it," Oxfam's head of inequality policy, Max Lawson, said.

But Irish finance minister Paschal Donohoe, whose country is potentially affected because of its 12.5% tax rate, said any global deal also needed to take account of smaller nations.

The G7 includes the United States, Japan, Germany, Britain, France, Italy and Canada.

Tech giants and tax havens targeted by historic G7 deal
 

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Comments (45)
Walid Abou assi
Walid Abou assi Jun 05, 2021 10:03PM ET
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Market manipulation at its best , green on monday
Atlantic Coast Money
Atlantic Coast Money Jun 05, 2021 10:03PM ET
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Lol. You got it backwards. Taxes are a big profit slicer.
Jokers R Us
Jokers R Us Jun 05, 2021 8:11PM ET
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China gets special treatment ofcourse. Chinas rise to power was in no way organic, it was organized and chosen by the banks and small hat tribe.
Jeff Kenkel
Jeff Kenkel Jun 05, 2021 7:58PM ET
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The customers pay for everything a corporation sells . The corporation only collects taxes for the government… unreinbursed btw
Sr Ma
Sr Ma Jun 05, 2021 7:27PM ET
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Globalists. Gotta love the chosen tribe.
Kit Ali
Kit Ali Jun 05, 2021 6:04PM ET
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and blown all the money on a bunch of BS socialist programs that will only make things worse. it's better to have it sitting in tax haven vs giving to the government.
Steffen vdm
Steffen vdm Jun 05, 2021 5:51PM ET
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G7-countries digging a hole for themselves. China must be so happy.
Kaveh Sun
Kaveh Sun Jun 05, 2021 4:23PM ET
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This benefits Eu. In return, eu still give usa the finger. Usa rep is d/u/m/p.
Steffen vdm
Steffen vdm Jun 05, 2021 4:23PM ET
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United States takes part in this deal. How can you say EU gives USA the finger?
Ad Cline
Ad Cline Jun 05, 2021 3:56PM ET
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sultan...It's been proven that corporations don't raise prices because of taxes. according to past history it just dosn't happen. that is a fallacy, a debunked idea, that the multinational corporations what you to believe.
Ad Cline
Ad Cline Jun 05, 2021 3:19PM ET
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djChan.. g7 just threw a monkey wrench into the power of the multinational corporations. power to play one country against another so they could avoid paying any taxes. I think you're talking about the fascist governments in China and Russia.
David David
David9 Jun 05, 2021 3:19PM ET
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No, Russia and China follows the UN... the world cannot let a small group of 7 decide this and that... because the world has 100s of countries... China said this at the Alaska meeting... Go read Ray Dalio's the Changing World Order...
Ian RB
Ian RB Jun 05, 2021 3:19PM ET
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You're right, the G7 can't set the rules for the world, but they can set it for themselves, and if they decide that they don't like multinationals not paying their share, they can pass laws to tax them the difference in what they're saving through the tax havens. Alternatively, the multinationals can choose not to do business with the G7 countries. Are you comfortable with a family making $100k paying more in taxes than Amazon? Apple pay 12.5% officially in Ireland, but their effective tax rate (after loopholes) is 0.05%. It has no effect on who they hire or what they pay, that is determined by the job market. This is closing loopholes that have given the rich a higher percentage of the wealth than at any time in human history, while they automate and cut as much staff as efficiency will allow.
Ravi Kiran
Ravi Kiran Jun 05, 2021 2:53PM ET
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How u spend the tax money is what matters.. Not how much you collect.. FB Twitter and Google supported Biden. LOL
Aleksandr Rogovoy
Aleksandr Rogovoy Jun 05, 2021 2:53PM ET
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I think that will use money fos social revolution in progressive society
David David
David9 Jun 05, 2021 12:20PM ET
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This is what we called Bowl Sheet...
christos rousakis
christos rousakis Jun 05, 2021 11:59AM ET
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big red eazy 4020 undil friday
Casi Peli
Casi Peli Jun 05, 2021 11:07AM ET
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They are coming for us. Did u liked covid 19? watch what is happening and soon you will see tht covid19 is nothing compared to what is coming.
Mase Gumbo
Mase Gumbo Jun 05, 2021 11:07AM ET
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whats coming is straight jacket for you mate
Ian RB
Ian RB Jun 05, 2021 11:07AM ET
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You need to stop getting your news from Facebook. Whatever crazy rabbit hole you're going down is messing up your head.
Jokers R Us
Jokers R Us Jun 05, 2021 11:07AM ET
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Whats coming is nothing for Americans because we have guns
DJ Chan
DJ Chan Jun 05, 2021 10:59AM ET
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The definition of Facism is when governments collude with corporations to rule…a country…or one world government.
DJ Chan
DJ Chan Jun 05, 2021 10:59AM ET
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Hey thumbs down, you can’t change definitions. Oh, wait! You can, just go woke also equates to go broke.
Ad Cline
Ad Cline Jun 05, 2021 10:59AM ET
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chan g7 just threw a monkey wrench into the power of the multinational corporations. power to play one country against another so they could avoid paying any taxes. I think you're talking about the fascist governments in China and Russia.
Ian RB
Ian RB Jun 05, 2021 10:59AM ET
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That's not the definition of fascism. Fascism is an authoritarian system of government where the is complete subserviance to a single dictator with heavy societal norm rules. Like ******Germany, or North Korea today. What you're describing is the current US system with lobbyists and the unchecked power corporations hold since the Citizens United supreme court ruling. I think you need a new dictionary.
Ian RB
Ian RB Jun 05, 2021 10:59AM ET
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They automatically crossed out the 4 letter word that represents the German national socialist party of the 1920's - 1946, rhymes with potsy. You get the gist.
danny Levine
danny Levine Jun 05, 2021 10:52AM ET
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do these guys know there are more countries than G7? plenty of countries are more business friendly. Biden has cancelled everything Trump has done to this country
Jesse Meikle
Jesse Meikle Jun 05, 2021 10:52AM ET
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Someone didn't read the article.
Tony Huynh
Tony Huynh Jun 05, 2021 10:52AM ET
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Jesse, but but Biden is big bad, Orange Man good
Jokers R Us
Jokers R Us Jun 05, 2021 10:52AM ET
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Its a coordinated effort by all western nations to suffocate themselves with taxed and regulations to make China artificially superior.
DrFunkenstein hayson
DrFunkenstein hayson Jun 05, 2021 10:28AM ET
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I think it's long past time that we stopped listening to and stopped obeying these corrupt 🤡that only serve themselves and their banker bosses.
Dark Side of the moon
Dark Side of the moon Jun 05, 2021 10:25AM ET
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... As gravity attracts everything to fall, the same happens with taxes, those will attract stocks so the last will go lower
DrFunkenstein hayson
DrFunkenstein hayson Jun 05, 2021 10:20AM ET
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garbage. these people are pawns that's all they are. so they really serve the people? absolutely not. why are we still listening to these 🤡🤡🤡. they are puppets for the elite bankers that's all they are...
King Power
King Power Jun 05, 2021 10:16AM ET
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Inflation
Victor Ng
Victor Ng Jun 05, 2021 10:16AM ET
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You even read?
Tony Coll
Tony Coll Jun 05, 2021 10:04AM ET
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So essentially this will take money from smaller/poorer nations (like Ireland) that use low taxes to attract companies for much needed income, and give it to nations that do not have a greater need... cool, that's wonderful news, and a big win for equality (sarcasm).
Victor Ng
Victor Ng Jun 05, 2021 10:04AM ET
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Exactly what im thinking. Some ppl in this comment dont even read the whole thing
Ian RB
Ian RB Jun 05, 2021 10:04AM ET
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Ireland will be fine. It's the only English speaking country in the EU and has a highly educated workforce. It's taxes will still be lower than most countries and it will actually get to take in some tax revenue. The only people this hurts are the companies who are abusing the system. 15% is still a very low tax rate.
Ad Cline
Ad Cline Jun 05, 2021 10:04AM ET
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Tony coll... the rich greedy and corupt multi national corporations friend. why would any responsibly run corporation, want to locate a corperate headquarters in a 3 world country, they usually are unstable and corrupt. I guess so they can bribe and control their leaders, and pay no taxes. it's time these multinational corporations pay their taxes or their corporate officers go to jail for tax evasion. we should start with Apple.
Ian RB
Ian RB Jun 05, 2021 10:04AM ET
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I agree with most of what you're saying, but Ireland isn't a third world country, it's not even close. It has a perfectly stable government (far more stable than the US these days -but that's not difficult), with a high percentage of college educated and a higher average personal income (by about $15k/year) than the US. What the multinationals have been doing is immoral, but not illegal. Hopefully this new minimum tax fixes that.
Sultan Alsaigh
Sultan Alsaigh Jun 05, 2021 9:59AM ET
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REDDDD IN MONDAY
Show previous replies (1)
Sultan Alsaigh
Sultan Alsaigh Jun 05, 2021 9:59AM ET
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+ higher prices which consumer is going to pay for
Yousef Khayat
Yousef Khayat Jun 05, 2021 9:59AM ET
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Hienz all the way
Sultan Alsaigh
Sultan Alsaigh Jun 05, 2021 9:59AM ET
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Yousef Khayat ketchup ketchup Blood bath
Ad Cline
Ad Cline Jun 05, 2021 9:59AM ET
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sultan...It's been proven that corporations don't raise prices because of taxes. according to past history it just dosn't happen. that is a fallacy, a debunked idea, that the multinational corporations what you to believe.
Ian RB
Ian RB Jun 05, 2021 9:59AM ET
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No they won't. Markets still set prices, this will just hurt their already bloated profit margins.
Jo Pa
Jo Pa Jun 05, 2021 9:54AM ET
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No one votes to raise their own taxes, only one other people. Companies will be forced to raise their prices on products to afford the tax. The people pay corporate tax. Smoke and mirrors.
CJ Burton
CJ Burton Jun 05, 2021 9:28AM ET
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LOL! All the "woke" corporations that supported Democrats just got what they deserve!
gc Myers
gc Myers Jun 05, 2021 9:28AM ET
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well said lol.
Carlos GV
Carlos GV Jun 05, 2021 9:28AM ET
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anyway thats really good news!! Monopolies are a threat to markets
Michael Becker
Michael Becker Jun 05, 2021 9:28AM ET
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Monopolies are not a good thing, so break them up. The biggest threat to free markets and to freedom and liberty in general is big government.
Jokers R Us
Jokers R Us Jun 05, 2021 9:28AM ET
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Got what they deserve? The corporations are the ones pushing for higher taxes. It squashes the little guy and makes competition obsolote.
leehiung chong
leehiung chong Jun 05, 2021 9:28AM ET
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together with big business corporations ...cheaters and liars
gc Myers
gc Myers Jun 05, 2021 9:06AM ET
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ok let's all chip in buy a small island declare it sovereign then let all the corporations make there head quarters there for a 10% tax lol. the problem is corporations are always smarter then government. and new loopholes will arise immediately
Andrew Williams
Andrew Williams Jun 05, 2021 9:06AM ET
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It is not that corps are smarter; they have more flexibility.
Zenaida hossin
Zenaida hossin Jun 05, 2021 9:02AM ET
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I cannot receive money here I really need
 
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