The Hustle

G-7 tax deal seeks to end to Big Tech tax havens

The G-7 countries want a 15% global minimum tax. Big Tech is showing support for it.

June 9, 2021

Last weekend, finance ministers from the G-7 countries — Canada, France, Germany, Italy, Japan, the UK, and the US — agreed on tax reforms that could impact the world’s biggest digital companies.

As it stands, companies are taxed where they operate. Multinational companies can shift profits to countries with more favorable tax rates or no taxes at all. Example: In 2017, Google was accused of moving ~$23B to a tax haven in Bermuda.

The new plan would:

US Treasury Secretary Janet L. Yellen said the global minimum tax “would end the race to the bottom in corporate taxation and ensure fairness for the middle class and working people in the US and around the world.”

The Organization for Economic Cooperation and Development’s (OECD) last estimate indicated reforms could bring in $81B annually, though that was using a tax rate of 12.5%, per The Guardian.

So, how does Big Tech feel about it? 3 claim their support:

What’s next?

In July, the G-7 will present the proposal to finance ministers from the G-20 nations, who could sign a final deal by October, per The New York Times.

Fun fact: The “double Irish with a Dutch sandwich” is a tax-evasion technique that uses Irish and Dutch subsidiaries to shift profits. So, way less delicious than we’d hoped.

NOTE: One of the biggest tax havens on Earth is right here in the US. Read our Sunday feature on how corporations use the state of Delaware to cut down their tax bills.

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