Snack is “confident” to reach a tech tax agreement

Rishi Sunak

Rishi Sunak

Prime Minister Rishi Sunak said he was “confident” in reaching a global agreement on digital taxation prior to the meeting of global financial leaders.

Taxation on large tech companies is causing friction between the United States and countries, including the United Kingdom.

The United States announced sanctions on Wednesday, but suspended sanctions to give more time for negotiations.

The Finance Minister will also discuss climate change at a two-day meeting in London on Friday.

On Wednesday, the United States announced that it would impose tariffs on about $ 2 billion (£ 1.4 billion) of imports, including certain goods from the United Kingdom, in retaliation for taxing major tech companies in the United States.

However, it immediately suspended them to allow further negotiations between the G20 and the Organization for Economic Co-operation and Development (OECD).

Snack is expected to promote an agreement on this and urge all global companies to commit to climate reporting.

The 25% tariff imposed by the United States applies to goods from the United Kingdom for $ 877 million, as well as goods from Austria, India, Italy, Spain and Turkey.

The United States states that the digital services tax levied by six countries that tax technology companies on revenue rather than profit is “unfair.”

US tariffs have been suspended for 180 days for consultation.

Analysis Box by Economic Correspondent Andrew Walker

Analysis Box by Economic Correspondent Andrew Walker

This clear answer from interviewees, like when I recently asked the Secretary-General of the Organization for Economic Co-operation and Development (now a former job) whether President Biden’s new administration changed the dynamics of tax negotiations. I rarely got it.

Angel Greer, who resigned a few days ago, told me: “Exactly. The answer is completely, completely, yes.”

Under President Trump, the United States was clearly enthusiastic about both the minimum tax rate and the “pillar” of talks, which is a matter of digital services.

For the latter, the Trump administration proposed what was called a safe harbor clause, which Greer described as “a kind of voluntary taxation option.”

Currently, the United States is in favor of both, but the proposed minimum of 15% is too low for many activists’ tastes.

The G7 is not the forum where the final deal takes place. But group support will give momentum to the proposal and a real chance of being agreed if they can make further progress.

Prior to the two-day G7 financial summit, Snack said, “The G7 is a very important group and I am honored to have my counterpart in London with a new spirit of multilateral cooperation.” ..

“Before becoming the G7 Presidency, we have clarified our priorities: protecting employment, ensuring an environmentally friendly global recovery, and helping the world’s most vulnerable countries. That is.

“This year, ensuring a global agreement on digital taxation was also an important priority. We want businesses to pay the right amount of tax in the right place and are fair with their partners. I hope you can make a deal.

“We are determined to work together and unite to tackle the world’s most pressing economic challenges, and we are very optimistic about bringing some concrete results this weekend. . “

Ministers will consider ways to prevent companies such as Google, Amazon, Starbucks, and Apple from paying low or no taxes in profitable countries.

All G7 countries, with the exception of the United Kingdom, support the US proposal for a world minimum corporate tax rate of 15%, which can raise $ 50 to $ 80 billion to governments around the world.

However, the UK wants peace of mind about the digital service tax, which imposes 2% on revenues earned in the UK from online marketplaces, search engines and social media platforms.

HM Treasury is said to be tolerant of the idea of ​​global corporate minimum tax rates and ready to exempt digital services tax if it can be assured that Big Tech will not be easily let go.

The Biden administration initially called for a global minimum corporate tax rate of 21%, but it has now been reduced to 15%. However, officials say it is considered a very “floor”.

Finance Ministers from the United States, Japan, France, Canada, Germany and Italy will attend a meeting at Lancaster House with representatives from the European Commission, Eurogroup, the World Bank, the IMF and the OECD.

Snack will put pressure on his counterparts to follow the UK’s lead in mandating climate reporting in the financial system.

Ministers will also meet to discuss support for low-income countries and global recovery after the new coronavirus infection.

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