G7 countries: Scholz: historic breakthrough achieved in digital tax

Worldwide minimum tax and taxation at the place where profits are made: After years of negotiations, important industrial nations have agreed on the pillars of a global digital tax. "This is now the final decision," said Federal Finance Minister Olaf Scholz on Friday evening in London. "This is the breakthrough that we have long expected and hoped for and for which we have worked so hard." It was a good result for Germany as well as for the world, emphasized the SPD politician on the sidelines of a G7 meeting. Finance minister. On the British broadcaster Sky News, he spoke of a "historic moment" that would change the world. Only details remain to be clarified.

A model with two pillars is planned.

On the one hand, it should regulate how many taxes multinational companies have to pay - and where.

So far, taxes are only due at the company headquarters, but not in countries where large corporations such as Google or Amazon generate their sales.

As a result, many companies moved their headquarters to countries with lower corporate taxes.

A global minimum tax, which should not be less than 15 percent, is planned as the second pillar.

The USA in particular has exerted pressure here.

This minimum tax is intended to put an end to the global race for the lowest tax rate.

Scholz expects significant additional income

"We have to manage to end the tax dumping competition," said Scholz. The agreement in the G7, the group of seven leading industrial nations, is to be followed in the summer by the agreement in the G20, a broader group of leading industrial nations. It should no longer happen that corporations pay no or almost no taxes via tax havens, warned Scholz. In addition to Germany, the G7 also includes Great Britain, which currently holds the chairmanship, as well as the USA, France, Italy, Japan and Canada.

In view of the huge sums that the countries spent during the pandemic to protect citizens, jobs and the economy, now is the right time to set such a course, said Scholz. The pandemic made it clear that economic reconstruction could not be financed if the corona crisis was followed by tax dumping competition.

The minister expects significant additional income. “Europe and Germany will benefit greatly from the global minimum taxation. We are therefore expecting considerable additional income that will be possible as a result. ”Germany also benefits from the other pillar with taxation at the place of sales. He assumes that it "will rather lead to an improvement in our income situation". Scholz said that fair taxation of large international corporations is also a question of internal justice and is important for cohesion.

Countries with lower corporate taxes such as Ireland are still reluctant to introduce a minimum tax. In the EU state, only 12.5 percent corporate tax is due, which is why several large corporations have their headquarters there. If a digital tax were introduced, Ireland would have to raise taxes - or penalties from other economies. However, Scholz was confident that ultimately all countries in Europe would agree to a global agreement.