EU finance chiefs ‘within reach’ of breakthrough in global battle against tax abuse

Leading EU nations have pledged to agree plans at a G7 meeting in London today that will pave the way for an end to international tax abuse by multinational companies.

In a joint article published in The Guardian, the finance ministers of France, Germany, Italy and Spain write that after “more than four years of efforts” to create “an international tax system fit for the 21st century”, it is “time to come to an agreement”.

The ministers are “hoping and praying to finally clinch” a “tentative” deal during talks at Lancaster House today and tomorrow, says Politico’s Brussels Playbook. The proposed agreement is part of international efforts to “force big tech companies to pay more into government coffers, and to prevent some countries from effectively acting as tax havens”, the news site reports.

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Under the plans, nations would be permitted to start taxing parts of multinational companies’ profits in the countries where they sell their goods and services, and to set a minimum rate for corporate taxes.

A source told Politico that the promised G7 agreement “won’t be a technical document” but rather a brief statement outlining the principles of the new system that can be taken to a G20 meeting in Venice next month.

Joe Biden is playing a leading role in the push to crack down on tax abuse, laying out plans earlier this year for a global minimum corporate tax of at least 15%, after backing down from an original target of 21%.

The UK is the only G7 country that has not yet expressed support for the US president’s plan. The BBC reports that Downing Street is “holding out for reassurances about the Digital Services Tax, which levies 2% on revenues derived in the UK from online marketplaces, search engines and social media platforms”.

But the government ”is said to be prepared to let the Digital Services Tax go if it obtains assurances that big tech will not simply be let off the hook”, the broadcaster adds.

Chancellor Rishi Sunak has insisted ahead of today’s meeting that he is “determined” to secure a fair deal on global taxation.

“We want companies to pay the right amount of tax in the right place, and I hope we can reach a fair deal with our partners,” he said. “I’m hugely optimistic that we will deliver some concrete outcomes this weekend.”

According to the BBC, the “ministers will be looking at how to stop the likes of Google, Amazon, Starbucks and Apple paying low or no taxes in countries where they generate revenues”.

The meeting is taking place as reports surface that an Irish subsidiary of US technology giant Microsoft paid no corporation tax on $315bn (£223bn) in profit last year.