Top Finance Officials Agree on Tax Plan for International Companies
2021-06-08
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1Top finance officials from the G7 industrialized nations agreed on Saturday to the idea of a worldwide minimum tax for international corporations.
2Observers say the agreement signals coming changes to laws for taxing businesses across borders in the future.
3However, many details have yet to be worked out before a larger group of nations, the G20, is likely to give its support to the idea.
4G20 officials are expected to meet next month.
5Here are some of the details that have been agreed on:
6The G7 agreement of having a worldwide tax rate for international corporations of at least 15 percent now faces another test.
7An online meeting of the Organization for Economic Cooperation and Development is planned for June 30 to July 1.
8The OECD is based in Paris.
9In that meeting, a group of 139 countries will negotiate the idea with the aim of reaching agreement on additional details.
10Any agreement these nations reach will be studied by a meeting of G20 finance ministers who are meeting in July.
11Observers say, if the G20 countries agree to the minimum tax, then it would likely become a worldwide rule.
12The idea of a worldwide minimum tax is that it gives countries the ability to tax company profits even if they are reported in countries with low tax rates.
13The G7 finance officials want the minimum tax to be used for individual countries.
14They do not appear to support using an average rate for all countries in which a business might operate.
15Here is an example of how the tax might work.
16If a U.S. company reports a profit in the British Virgin Islands, which has no corporate tax, U.S. tax officials could still tax that company's profits at a rate of 15 percent.
17G7 ministers are also discussing how to tax the biggest international companies like Apple and Google.
18Those details have not been made final.
19However, some industries, such as the mining industry, are likely to be exempt because of the way they pay governments and make profits.
20Also, countries such as China want to protect low-tax, special economic areas to support investment and development.
21The OECD estimated in October that a worldwide minimum tax would provide $100 billion dollars in additional tax income each year for governments around the world.
22That is about four percent of all income tax collected around the world in one year.
23While that is a lot of money, it is a small amount when compared to the trillions of dollars large countries have spent because of the COVID-19 health crisis.
24I'm Mario Ritter, Jr.
1Top finance officials from the G7 industrialized nations agreed on Saturday to the idea of a worldwide minimum tax for international corporations. 2Observers say the agreement signals coming changes to laws for taxing businesses across borders in the future. However, many details have yet to be worked out before a larger group of nations, the G20, is likely to give its support to the idea. G20 officials are expected to meet next month. 3Here are some of the details that have been agreed on: 4What countries will be affected? 5The G7 agreement of having a worldwide tax rate for international corporations of at least 15 percent now faces another test. An online meeting of the Organization for Economic Cooperation and Development is planned for June 30 to July 1. The OECD is based in Paris. 6In that meeting, a group of 139 countries will negotiate the idea with the aim of reaching agreement on additional details. Any agreement these nations reach will be studied by a meeting of G20 finance ministers who are meeting in July. Observers say, if the G20 countries agree to the minimum tax, then it would likely become a worldwide rule. 7How does the tax work? 8The idea of a worldwide minimum tax is that it gives countries the ability to tax company profits even if they are reported in countries with low tax rates. The G7 finance officials want the minimum tax to be used for individual countries. They do not appear to support using an average rate for all countries in which a business might operate. 9Here is an example of how the tax might work. If a U.S. company reports a profit in the British Virgin Islands, which has no corporate tax, U.S. tax officials could still tax that company's profits at a rate of 15 percent. 10Details to be worked out 11G7 ministers are also discussing how to tax the biggest international companies like Apple and Google. Those details have not been made final. 12However, some industries, such as the mining industry, are likely to be exempt because of the way they pay governments and make profits. Also, countries such as China want to protect low-tax, special economic areas to support investment and development. 13The OECD estimated in October that a worldwide minimum tax would provide $100 billion dollars in additional tax income each year for governments around the world. That is about four percent of all income tax collected around the world in one year. While that is a lot of money, it is a small amount when compared to the trillions of dollars large countries have spent because of the COVID-19 health crisis. 14I'm Mario Ritter, Jr. 15Leigh Thomas reported this story for Reuters. Mario Ritter Jr. adapted it for VOA Learning English. Susan Shand was the editor. 16___________________________________________________________ 17Words in This Story 18minimum -n. the lowest number or amount that is possible or that is permitted 19exempt -adj. not required to do something that others are required to do 20We want to hear from you. Write to us in the Comments section, and visit our Facebook page.