G7 backs Biden’s sweeping overhaul of global tax system

By Tara John, CNN Business

Finance ministers from the Group of Seven (G7) nations have put their support behind the Biden administration’s ambitious plan to overhaul the global tax system, backing a minimum tax of at least 15% on corporate earnings.

“G7 finance ministers… after years of discussions, have reached a historic agreement to reform the global tax system to make it fit for the global digital age and, crucially, to make sure that it’s fair so that the right companies pay the right tax in the right places,” UK finance minister Rishi Sunak said in a video posted on Twitter Saturday.

The agreement was made during a G7 meeting of finance ministers in London, attended by US Treasury Secretary Janet Yellen, where she sought backing for the administration’s efforts to rewrite international tax rules and discourage American companies from booking earnings abroad.

Last month, the US Treasury proposed a global minimum tax of at least 15%, aiming to tackle an unwieldy international system rife with loopholes. Establishing a minimum rate could help discourage companies from shifting their profits to countries where they would pay less tax.

“With the global corporate minimum tax functionally set at zero today, there has been a race to the bottom on corporate taxes, undermining the United States’ and other countries’ ability to raise the revenue needed to make critical investments,” the US Treasury said in a statement on May 20.

This is a breaking story, more to follow.