G7 corporate tax deal for India and the world

The Finance ministers meeting of G7 grouping in London agreed to combat tax evasion by requiring corporations to pay taxes in the countries where they do business.

Daily Current Affairs Quiz 2021

The first decision that has been ratified is to require multinational corporations to pay taxes in the countries where they operate.

The agreement’s second conclusion commits governments to a worldwide minimum corporate tax rate of 15% in order to prevent countries from undercutting one another.

The decision to ratify a 15% floor rate follows from a declaration of war on low-tax jurisdictions around the globe announced by US Treasury Secretary Janet Yellen in April 2021, who had urged the world’s 20 advanced nations to move in the direction of adopting a minimum global corporate income tax in April.

She that the move to put a minimum rate in place attempted to reverse a “30-year race to the bottom” in which countries have resorted to slashing corporate tax rates to attract multinational corporations.

The US proposal had proposed a higher 21 per cent minimum corporate tax rate, coupled with cancelling exemptions on income from countries that do not legislate a minimum tax to discourage the shifting of multinational operations and profits overseas.