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Sunak says deal to be done on tax at G7
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ritish finance minister Rishi Sunak said there was a deal to be done with the United States on tax but big tech firms would have to pay their fair share in return for British backing for Washington's corporation tax proposals.
The United States has proposed a global minimum corporation tax rate of 15 percent, well below G7 levels, but above those in some countries such as Ireland. But Britain remains concerned the plans do not go far enough on taxation of tech giants such as Amazon, Google and Facebook.
"We need them to understand why fair taxation of tech companies is important to us. There's a deal to be had, so I'm urging the US – and all of the G7 – to come to the table next week and get it done," Sunak told the Mail on Sunday newspaper ahead of a meeting of G7 finance ministers on June 4-5.
"Negotiations are going well [...] But it has to be the right deal for Britain and that's what this week's negotiations will be about."
Sunak said that firms like Facebook themselves also wanted resolution on the issue that would give them certainty and stability.
He also said that he wanted to "level the playing field for British high streets", with Britain looking at a separate online sales tax.
"Fundamentally, the global tax system isn't working [...] Large multinational companies, particularly digital companies, are able by the nature of their businesses not to pay the right tax in the right places. And that's not fair," he said.
"That's what we're fighting hard to fix in these negotiations. If everyone works hard over the next few days and weeks, I'm confident that we can find a good place."
Britain will host an in-person meeting of finance ministers in London on June 4-5, when Sunak also hopes to broker a deal among G7 countries on a joint approach to business taxation.
The United States has proposed a global minimum corporation tax rate of 15 percent, well below G7 levels, but above those in some countries such as Ireland. But Britain remains concerned the plans do not go far enough on taxation of tech giants such as Amazon, Google and Facebook.
"I look forward to next week's meeting as we continue working together to support jobs and secure a green and global economic recovery," Sunak said after chairing Friday's virtual talks, which also discussed the world economy and central bank digital currencies.
US Treasury Secretary Janet Yellen told the meeting it was important to provide further fiscal support "to promote a robust and lasting recovery in the wake of the pandemic", the US Treasury said.
Earlier on Friday the White House unveiled a US$6 trillion budget proposal intended to ramp up spending on infrastructure, education and combating climate change.
Irish finance minister Paschal Donohoe – who attended the meeting in his capacity as chair of the euro zone's group of finance ministers – said the COVID-19 pandemic had reinforced the need for international cooperation.
"As we emerge from this crisis and open up our economies [...] we will increasingly need policies that help us to build, grow and adapt," he said.
Some sources close to Friday's talks said a deal on tax could be reached as soon as next week.
But others are more pessimistic and expect a vaguer statement of principles rather than agreement on a specific minimum tax rate.
Britain will have another chance to get agreement when Prime Minister Boris Johnson hosts a meeting of G7 heads of government on June 11-13.
A French finance ministry official said after Friday's meeting that a clear statement by the G7 would boost the chances of the international consensus needed at a meeting in July of the G20, which includes large emerging economies.
The Paris-based Organization of Economic Cooperation and Development has been trying to shepherd global tax reform for years, mostly via the G20.
In the absence of progress, Britain imposed a digital services tax in 2020 on tech companies with global revenue of more than 500 million pounds ($710 million) and sales in Britain exceeding 25 million pounds. France took similar steps in 2019.
The United States has threatened tariffs over these measures and wants them removed as part of a global tax deal. Britain does not want a deal that increases revenue overall but reduces taxes paid by foreign companies in Britain.
