media caption G7 global tax 'levels the playing field '
An agreement history reached by rich countries to force multinational companies to pay more taxes has been criticized by activists for not going far enough.
The meeting of finance ministers of the G7 in London agreed to fight tax evasion by forcing big companies to pay more taxes in the countries where they do business.
Tech giants likely to be impacted have welcomed the new rules.
But charity Oxfam says an overall minimum corporate tax rate of 15% is far too low "to make the difference.
L deal announced on Saturday between the G7 group of rich countries - the US, UK, France, Germany, Canada, Italy and Japan, as well as the EU - could see billions of dollars reaching governments to pay off debts contracted during the Covid crisis.
British Chancellor of the Exchequer Rishi Sunak, who hosted the summit, said the deal would create "a fairer tax system, fit for the 21st century ".
The right to tax is essence of sovereign power. This is why coordinated international action is so difficult.
This has been the dream of activists and mainly European finance ministers for years. They hardly believed that it was possible until the last few months, but the need to fill the coffers emptied by the pandemic, and the arrival of the Biden administration in the United States, created a moment of opportunity.
There was, however, a big trade-off to get this across the line. A minimum rate of iThe 15% corporate tax is rather low. Although European finance ministers have managed to include the phrase "at least 15% ", which offers a way to increase this number.
The actual scope of this change will depend on the fine print of ongoing negotiations. Tech companies say they welcomed the move. Facebook vice president Nick Clegg said they recognize this could mean the company "pays more taxes and in different places ".
And then there is the question of the rest of the world. It now goes from the G7 to the larger group of the G20, including China, Russia and Brazil, and then beyond.
A process has started, a precedent has been set. It may or may not end up being transformative, but this moment is historic.
How would the deal work?
Rules to force multinationals to pay taxes where thThey operate - known as "pillar one " of the agreement - would apply to global companies with a profit margin of at least 10%.
Twenty percent of any top profit would be reallocated and taxed in the countries where they operate, according to the G7 press release .
US Treasury Secretary Janet Yellen said it was understood that national taxes on digital services such as those levied by UK and EU countries would be deleted and replaced by the new agreement. presented by the United States as unfairly targeting the American tech giants.
"The exact timing remains to be worked out, but there is broad agreement that these two things go hand in hand " the Treasury Secretary said.
Ireland low tax rate - which risks losing out - says the concerns of small countries need to be addressed.
How have businesses responded?
The tech giants gave it an optimistic assessment.
"We want the international tax reform process to be successful and to recognize that this could mean Facebook is paying more taxes, and in different places, " said Nick Clegg of Facebook.
An Amazon spokesperson said the deal is a "step forward " in bringing "stability to the international tax system ".
A Google spokesperson said: "We strongly support the ongoing work to update international tax rules. We hope countries will continue to work.working together to ensure that a balanced and lasting agreement will soon be finalized. "