LONDON (Reuters) – UK Finance Minister Rishi Sunak has said a US proposal to focus on the world’s 100 biggest and most profitable companies under a global tax deal could work, but he insisted that big tech companies have to pay more taxes in the countries where they operate. .
Sunak told Reuters that the Group of Seven was making “very good progress” on the long contested reform before finance ministers from the rich economies group traveled to London for talks on Friday and Saturday.
The meeting will be their first face-to-face since the start of the COVID-19 pandemic. It is also the first since Joe Biden replaced Donald Trump as President of the United States, raising hopes for greater cooperation between Washington and the rest of the world.
“It’s definitely something we can work with as long as it meets our goals of reaching the right companies and at first glance it’s possible,” Sunak said in an interview, conducted in his number office. 11 Downing Street, when asked about the US proposal. “We just have to work on the details. “
The plan would simplify the approach to taxing multinational corporations. It would focus on the profits of the 100 largest companies that have benefited the most from globalization, foremost among which are the tech giants, which saw their businesses explode during the pandemic.
Britain and other countries fear this will offset the possible impact of a parallel plan for a global minimum corporate tax rate that could funnel more money from U.S. coffers to their own. costs, just as they face the enormous costs of piloting their economies through the COVID-19 crisis.
Britain, which is chairing the G7 this year, is particularly concerned about missing an opportunity to tackle the way global companies shift their profits to low-tax countries after eight years of negotiations interrupted by the Trump administration.
But Sunak, a 41-year-old former Goldman Sachs analyst whose meteoric rise in government made him a possible candidate for prime minister in the future, praised his US counterpart Janet Yellen for “changing the dynamics” and said there was a way forward. based on the US proposal.
He warned that key points were still being discussed:
“I can’t go into specifics, but my general point is that the approach they laid out in principle is something we can work with. “
“REALLY STRONG SIGNAL”
In the absence so far of a global agreement on the distribution of tax rights, Britain and other countries have imposed taxes on digital services targeting the revenues of technology companies.
These taxes angered the Trump team who started a process that could lead to trade tariffs.
Biden’s administration suspended the process earlier this year. On Wednesday, he announced tariffs of 25% on more than $ 2 billion in imports from six countries, including Britain, but suspended them for 180 days to focus on international talks.
Sunak, speaking ahead of the tariffs announcement in Washington, said the £ 500million Britain expects to raise this year with its digital services tax “gives you an idea of what’s appropriate “for the outcome of a global agreement.
Sunak said he remained “confident and optimistic” that a tax deal could be reached by the G7 in time to be submitted to finance ministers of the Group of 20 at large in July, the target date for a global agreement.
German Finance Minister Olaf Scholz told Reuters in a separate interview he expected “significant progress” on tax matters in the London talks, but said all large digital companies should be covered by the new rules.
Some European officials are concerned that retailer Amazon, which has relatively low operating profit margins, may not be covered based on the agreed definition of profitability.
Sunak said beyond the numbers, reaching a deal on tax reform – and progress in aligning the financial system more closely with tackling climate change – would show international cooperation is working again.
“I think this sends a very strong signal that the big economies, the G7, are able to come together to solve difficult problems… and find out how to solve them,” he said. “We haven’t seen this for a little while.”
Writing by William Schomberg; Editing by Chizu Nomiyama