G7 deal will likely raise taxes for tech giants like Apple and Google

This includes a minimum tax rate for multinational companies.

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Jon Fingas
June 5, 2021 1:42 PM
Italy's Economy and Finance Minister Daniele Franco, France's Economy and Finance Minister Bruno Le Maire, Canada's Finance Minister Chrystia Freeland, Britain's Chancellor of the Exchequer Rishi Sunak, Managing Director of the IMF Kristalina Georgieva, Germany's Finance Minister Olaf Scholz, US Treasury Secretary Janet Yellen take their places as they prepare to pose for a family photo on the second day of the G7 Finance Ministers Meeting, at Lancaster House in London on June 5, 2021. - Finance ministers from wealthy Group of Seven (G7) nations are on Saturday expected to announce support for a minimum global level of corporate tax, aimed at getting multinationals -- especially tech giants -- to pay more into government coffers hit hard by the pandemic. (Photo by HENRY NICHOLLS / POOL / AFP) (Photo by HENRY NICHOLLS/POOL/AFP via Getty Images)

Tech giants are now likely to pay more taxes after years of breaks. BBC News reports that the G7 countries have struck a deal that will have multinationals like Apple, Amazon and Google pay more tax. The new agreement would have companies pay more taxes where they operate as long as they have a minimum 10 percent profit margin, with a tax on 20 percent of any profit above that figure. There would also be a minimum corporate tax rate of "at least" 15 percent to prevent countries from serving as tax havens.

There's an understanding that this would replace the digital service taxes in countries like the UK, according to US Treasury Secretary Janet Yellen.

Amazon and Google both claimed to have welcomed the arrangement as a modernization, with Amazon saying it would add "stability" to international tax.

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The move could raise the baseline tax rate for tech companies that have relied on havens in Ireland and other countries to minimize their expenses. That would please countries that have long accused the tech industry of depriving them of much-needed revenue, particularly during the COVID-19 pandemic. Companies have been bracing for increases like this for a while, but the G7 pact makes these hikes more likely and consistent.

Just when and how these changes would come about is another matter. The agreement will go through a larger discussion at a G20 meeting in July, and there's no guarantee those extra countries (including China and Russia) will agree to it. There's also the matter of timing — it could take years for countries to reshape their tax laws. However influential the G7's announcement might be, it's just the start of a long journey.

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G7 deal will likely raise taxes for tech giants like Apple and Google