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G-20 eyes broad int'l corporate tax reform agreement in July

In this April 17, 2007 file photo, exhibitors work on laptop computers in front of an illuminated sign of the Google logo at the industrial fair Hannover Messe in Hanover, Germany.

WASHINGTON (Kyodo) -- The Group of 20 major economies plan to strike a broad agreement on international tax reform in July, featuring new rules for the imposition of levies on global technology companies to curb tax evasion, G-20 sources said Saturday.

    The G-20 is considering allowing countries to impose levies on digital giants with large sales and profit rates of 15 percent and higher even if they do not operate in a country but generate sales and profits there, a practice known as digital taxation, the sources said.

    The major economies including the United States, China, Japan and the European Union are also expected to agree on a global minimum corporate tax rate of around 15 percent, they said.

    The G-20 talks are part of global tax negotiations involving around 140 countries being led by the Organization for Economic Cooperation and Development amid criticism that digital giants such as Google LLC and Apple Inc. are not paying their fair share of taxes.

    With countries having cut corporate taxes to attract multinational companies, an OECD agreement -- which negotiating parties are aiming for around October -- would mark a historic turning point in international tax reform.

    The G-20 plans to agree on key elements of a deal during a finance ministers meeting slated for July in Venice, Italy. With technical details to be worked out, a final agreement can be expected when G-20 leaders meet in Rome in October.

    The agreement would make it difficult for businesses to shift profits to low tax jurisdictions and ensure that tech giants pay more taxes in countries in which they make sales.

    The deal is also intended to help countries restore their finances, which have deteriorated as a result of massive stimulus measures in response to the coronavirus pandemic.

    According to the sources, the United States has called for narrowing the list of companies subject to digital taxation to around 100, based on sales and profit rates.

    Washington pushed for the profit rate of 20 percent, but other G-20 members believe the rate is too high, leading officials to take around 15 percent as an appropriate level.

    Countries that currently impose levies on companies will follow a new system once the OECD agreement is reached.

    As for a global minimum tax rate, G-20 members have been in talks with Ireland's corporate tax of 12.5 percent in mind.

    However, the level has been raised since U.S. President Joe Biden's administration recently proposed a rate of 15 percent or higher.

    The Biden administration has urged other countries to set a minimum global corporate tax rate to end the pressures of tax competition and corporate tax base erosion.

    The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.

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