British Finance Minister Rishi Sunak said that the G7 countries have reached a historic agreement to reform the global tax system, and to better distribute tax revenues to multinational companies, especially digital giants.

And the G7 finance ministers agreed - at their two-day meeting in London - to adhere to the principle of a global minimum tax of 15%, on multinational companies, including giant technology companies such as Amazon (AMAZON) and Google (GOOGLE).

Reuters said that a group of the world's richest countries reached - on Saturday - a historic agreement to plug cross-border tax loopholes, which are exploited by some of the largest companies.

The agreement - which could form the basis for a global agreement next month - aims to end a decades-old "race to the bottom" in which countries compete to lure giant corporations with ultra-low taxes and exemptions.

This, in turn, has cost the public coffers of these countries hundreds of billions of dollars, which now makes them urgently need to make up for that shortfall to pay the huge cost of supporting their economies that have been badly affected by the Corona virus crisis.

The G7 finance ministers met face to face for the first time since the pandemic began, for talks in London.

Agreement details

According to a copy of the final agreement seen by Reuters, the G7 ministers said they would adhere to "a global minimum tax limit of at least 15%, based on what each country determines".

"We pledge to reach an equitable solution on the allocation of taxation rights, whereby countries will have rights to tax at least 20% of the profits above the 10% margin of the largest and most profitable multinational corporations," he added.

The ministers agreed to compel major companies to announce their impact on the environment so that investors can easily decide on the decision to finance them (European)

The agreement is to ensure that big tech companies pay taxes in countries where they have customers and users, not just where they are headquartered.

Ministers also agreed to move towards requiring major companies to declare their impact on the environment in a more model way, so investors can easily decide their financing decision, which is a key objective for Britain.

Rich countries have been scrambling for years to agree on a way to collect more taxes from huge multinational corporations such as Google, Amazon and Facebook - the biggest affected by this tax - which usually limit their profits to low-tax countries or even grant exemptions.

Currently, large cross-border companies transfer their profits to countries and regions with low tax regimes (tax havens), such as the British Virgin Islands and Liberia, in order to pay taxes on income and profits.

The administration of US President Joe Biden gave the stalled talks a new impetus by proposing a minimum global corporate tax of 15%, above and below what countries such as Ireland charge, but below the lowest level among the G7.

On Saturday, US Treasury Secretary Janet Yellen praised the "unprecedented commitment" of the Group of Seven countries, and said in a statement that "this global minimum tax will end the race to cut corporate taxes."