Yesterday’s announcement from the G7 group of leading nations that they would introduce a global minimum corporate taxation rate of 15% is “far from fair,” according to Gabriela Bucher, executive director of Oxfam International.
The agreement by G7 – made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – was greeted by politicians and most press as a landmark in the battle to prevent multinational companies using tax loopholes to avoid paying corporation tax.
“After years of discussion, G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” British finance minister Rishi Sunak told reporters.
But Oxfam, together with many NGOs and organisations of civil society, are calling for a minimum rate of 25%, and regard this weekend’s announcement as a failure to tackle the issue.
“It’s about time that some of the world’s most powerful economies force multinational corporations, including tech and pharma giants, to pay their fair share of tax,” Bucher said in a press release.
“However, fixing a global minimum corporate tax rate of just 15 percent is far too low. It will do little to end the damaging race to the bottom on corporate tax and curtail the widespread use of tax havens.”
The 15% rate, she pointed out, is only as low as the soft tax rates already charged in countries like Ireland, Singapore and Switzerland, which does nothing to stop large companies using those countries as tax shelters.
“They are setting the bar so low that companies can just step over it,” she said.
“In a world beset by a pandemic, at a time of such desperate need, the G7 looked at corporate balance sheets bursting at the seams with over-inflated profits ―and immediately looked away,” she went on.
“The G7 has failed to help pave the pathway to refilling Covid-wracked government coffers and supporting people all around the world with the promise of better public services and jobs and future opportunities. The G7 had the chance to stand alongside taxpayers. They chose instead to stand alongside tax havens.”