G7 'close to demanding' minimum corporate tax rate

G7 members are understood to be close to supporting the idea of a minimum corporate tax rate among members and to possibly triggering a global shake-up of such levies.

The grouping of advanced economies, which comprises Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, could commit to the idea as soon as Friday, the Financial Times reported. The paper said on Monday such a deal could pave the way for the 37-member Organization for Economic Cooperation and Development to agree a global deal.

The Financial Times said such developments would amount to the "largest shake-up in international corporate taxation for a century".

A global agreement would make it much harder for huge companies to shift their profits to low-tax jurisdictions in so-called sweetheart deals, a practice many US technology giants have been accused of, along with territories including the Cayman Islands, Guernsey, the Isle of Man, Jersey, Ireland, and Liechtenstein.

The Financial Times said the US had been pushing for global minimum tax rates, and had initially called for a minimum rate of 21 percent. It said Washington had since modified that, to 15 percent.

Another important step

Germany and Italy have reportedly enthusiastically supported the US call in debates among G7 members.

The Financial Times quoted Daniele Franco, Italy's finance minister, as saying the proposed G7 deal was "another important step" in reforming global taxation.

But the United Kingdom has reportedly been less eager. Britain's Independent newspaper said on Monday the UK's main opposition, the Labour Party, had vowed to force a vote in Parliament on the issue because of that lack of urgency.

The paper said the party wants to stop multinationals circumnavigating corporate tax rules and undercutting the UK's high-street businesses.

Rachel Reeves, the Labour Party's shadow chancellor, said: "The Conservatives have a choice. They can join Labour in tackling large-scale tax avoidance or they can allow billions of pounds to leave Britain."

Campaigners from the UK's Tax Justice Network told The Guardian newspaper the US proposal to the G7 would amount to an additional 13.5 billion pounds ($19 billion) being directed into UK government coffers.

The G7, while not formally calling for the corporate tax deal at this stage, will convene for an online meeting on Friday, and an in-person meeting on June 4 and June 5, where member nations could propose and support the idea.