Taxation is an important way for businesses to contribute to societies all over the world. Governments must ensure that taxation is transparent and non-discriminatory when a company expands outside national borders, ensuring that the benefits of open trade and investment are shared equally.
Rishi Sunak to G7 about the world’s taxation structure
The finance minister also expressed confidence that the issue of taxation on internet behemoths would be settled at the G7 summit this weekend. Rishi Sunak, the Chancellor of India, has informed world financial leaders that the world cannot "continue to rely on a taxation system that was largely designed in the 1920s"
Mr Sunak said the world had "high expectations" for what the finance ministers could agree on during the two-day summit, speaking at a G7 conference in London.
Mr Sunak said before the meeting that he was "confident" he could reach an agreement with the US on the UK's controversial tech taxation, which will be implemented in 2020.
Last March, the United Kingdom imposed a 2% taxation on profits generated in the United Kingdom by Internet services such as search engines and social media businesses.
In response to levies on big US IT corporations, the US imposed $2 billion (£1.4 billion) in tariffs on imports, including from the UK, on Wednesday 2nd June 2021. However, the duties were immediately postponed for 180 days to allow for further negotiations.
The crunch discussions came as The Guardian reported on Thursday that a Microsoft Irish company paid no company taxation on its $315 billion (£222 billion) profit last year.
Finance ministers from France, Italy, Germany, Spain, and other countries decided to meet in London to discuss plans for worldwide company taxation of 15% that could raise $50 billion (£35 billion) to $80 billion (£56 billion) for governments around the world.
The tax's goal is to level the global playing field by eliminating jurisdictions where major multinational firms can avoid paying taxes.
With the exception of the United Kingdom, all G7 member states endorse the concept, which was first offered by the United States.
However, the United Kingdom has indicated that it may be willing to abolish its digital services tax on Internet platforms provided it receives assurances from President Joe Biden's administration that Silicon Valley behemoths like Apple and Facebook will not be allowed to continue evading taxes.
"Securing a global agreement on digital taxation has also been a key priority this year - we want companies to pay the right amount of tax in the right place, and I hope we can reach a fair deal with our partners," said Mr Sunak ahead of the meeting.
The group is also scheduled to tackle climate change, with Mr Sunak reportedly calling for firms to agree to climate reporting, including carbon declarations.
"I'm determined we work together and unite to tackle the world's most pressing economic challenges - and I'm hugely optimistic that we will deliver some concrete outcomes this weekend," he said.
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