G7 Taxation Plan on tech Giants

The meeting of the G7 Finance Ministers has agreed on a two-pillar’ taxation plan for tech giants.

Taxation Plan

• They agreed on the principle that large tech companies such as Google, Amazon, Facebook or Apple must be taxed in the countries in which they make money, even without being physically present there.
• There should be a minimum level of tax such as for example the U.S. GILTI regime to discourage countries from competing in a race to the bottom to attract business from digital multinationals.

G7 also called for developing new rules to address new business models allowing companies to do business in a territory without any physical presence.

U.S. GILTI Regime

The U.S.’s Global Intangible Low-Taxed Income regime (GILTI) subjects overseas intangible income to 10.5% to discourage firms from shifting profits abroad to avoid the nominal U.S. corporate tax rate of 21%.

G7

G7 is a group of seven major advanced economies as reported by the International Monetary Fund (IMF). Collectively they represent more than 64% of the net global wealth; high Human Development Index and 46% of the global GDP.

The members include Canada, France, Germany, Italy, Japan, UK and US.