Tech giants welcome G7 agreement on global corporate tax rate

The agreement will now be discussed at the G20 meeting in July

The world's biggest tech companies, including Google, Facebook and Amazon, have welcomed the historic G7 deal aimed at getting multinational firms to pay more tax.

The agreement, the first stage of setting a global minimum corporate tax rate of 15 per cent on multinational firms, was reached at a meeting of finance ministers from the Group of Seven (G7) countries in London on Saturday.

The changes will ensure that big multinational firms, specifically digital platforms, pay taxes in the countries where they operate and not only where they have headquarters.

Nick Clegg, vice president of global affairs at Facebook, praised the progress made at the G7 and described the deal as the major "first step towards certainty for businesses and strengthening public confidence in the global tax system."

"Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G7," Clegg said in a statement to Reuters.

"We want the international tax reform process to succeed and recognise this could mean Facebook paying more tax, and in different places," he added.

An Amazon spokesperson said that the company believes an OECD-led process that creates a multilateral solution would help bring stability to the global tax system.

The company expects discussions on the issue will continue to "advance with the broader G20 and Inclusive Framework alliance."

A spokesperson for Google told Reuters that the company strongly supports the new agreement and hopes that a "balanced and durable" deal would be finalised in coming months.

European Commission President Ursula von der Leyen called the agreement "a big step towards fairness and a level playing field."

G7 member countries agreed on the outline of the global corporate tax agreement, with an aim to deter multinational firms from avoiding taxes by filing their profits in low-rate countries, such as Ireland and Luxembourg.

The meeting was chaired by the UK Chancellor of the Exchequer Rishi Sunak, who called the deal "a proud moment".

He also thanked his G7 counterparts for "their willingness to work together".

"I am delighted to announce that G7 finance ministers today, after years of discussions, have reached a historic agreement … so that the right companies pay the right tax in the right places," Sunak said.

The UK was a holdout on the deal initially, saying any agreement must ensure that digital businesses pay their fair share, reflecting their economic activities.

Last week, the Fair Tax Foundation claimed in a new report that the biggest tech firms in the US paid almost $100 billion less in taxes than stated in their annual reports over the past decade.

The campaign group said the 'Silicon Six' (Amazon, Apple, Facebook, Microsoft, Netflix and Google's owner Alphabet) paid nearly $219 billion in income taxes from 2011 to 2020: about 3.6 per cent of their more than $6 trillion in combined revenue,

The report also claimed that the six firms paid roughly $149 billion less to global tax authorities than would be expected, had they paid headline rates where they operated. Amazon and Facebook were named as the worst offenders in tax avoidance.