RISHI Sunak has agreed a historic deal that will make global tech giants pay their fair share of tax.
The Chancellor said it was a “proud moment” after striking the landmark deal with fellow G7 finance ministers to close the net on big companies that do not pay enough tax.
Speaking after a meeting in London, Sunak said: “After years of discussion, G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age.
“To make it fit for the global digital age, but crucially to make sure that it is fair so that the right companies pay the right tax in the right places and that’s a huge prize for British taxpayers.
“It’s a very proud moment and I want to say thank you to my G7 colleagues for their collective leadership and for their willingness to work together to seize this moment to reach a historic agreement that finally brings our global tax system into the 21st century.”
The deal means the likes of Facebook, Google and Amazon will pay the same rate of tax no matter where in the world they make their money.
It aims to end a decades-long “race to the bottom” in which countries have competed to attract corporate giants with ultra-low tax rates and exemptions.
International leaders have been discussing the tech tax dodge since 2013 and the Americans were said to have been driving a hard bargain.
There were said to be sticking points over the percentage of revenue taxed and where it goes.
The Chancellor defended the decision not to push for a higher global corporation tax rate at the meeting after US President Joe Biden had initially argued it should be 21 percent.
Sunak told broadcasters in London: “I would say a couple of things. First of all, the agreement reached here today says at least 15 percent and secondly, it is worth taking a step back.
“This is something that has been talked about for almost a decade.
“And here for the first time today we actually have agreement on the tangible principles of what these reforms should look like and that is huge progress.”
Asked whether he was tying his own hands by having a minimum rate, Sunak replied: “I think what the British public want to know is that the tax system is fair, they want to know that there is a level-playing field – whether people are operating in tax havens or whether large, particularly online businesses, are able to not pay tax in the right places, they want that tackled.
“And that’s what this agreement gives us the ability to do and it has been agreed among G7 colleagues and once we broaden it out and implement it globally, it is a huge prize for British taxpayers.”
The US had said it wanted the UK, France and Italy to end their domestic digital services taxes if the deal was struck.
Finer points of the deal were argued over during a dinner last night.
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The Chancellor had told his counterparts that the digital giants should pay an appropriate level of tax where they operated so countries could raise revenue.
He also told them: “Opportunities to make truly lasting reforms like this do not come along very often.”
Sunak also urged other countries to follow the UK’s lead on climate change in areas such as setting up more transparent climate-related financial reporting systems.