São Paulo, 5 June 2021 — Today, the G7 Finance Ministers issued a communiqué about their joint agreement on new global tax rules. The announcement includes a commitment to “a global minimum tax of at least 15%”.
The Secretariat of Global Alliance for Tax Justice echoes the reservations and shares the frustration of other civil society organisations demanding more audacious solutions, and reiterates GATJ’s longstanding call for a Global Tax Body under the auspices of the United Nations, to ensure all countries’ participation in the decision-making of the global tax rules.
Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice said:
“There is nothing “historical” or a “game changing’ in this deal in terms of overhauling the outdated and unfair international tax rules. It’s a déjà vu! The G7 strike a deal among themselves and pave the way for a manipulated endorsement as an international agreement in informal platforms created by their OECD, outside the UN system. Developing countries are then locked forever into an “international agreement “with “binding and non-optional dispute resolution” arrangements which will continue to deny them their taxing rights on part of global profit generated in their economies.
“The original Biden proposal of 21 percent was abandoned and brought down to 15%, to make it closer to the tax haven minimum of 12.5 percent. And, the OECD package, to which this deal is being delivered as a parcel, will give the taxing right to recoup the undertaxed global profit to headquarter countries. It is Orwellian to call ‘a first step to an international agreement’ this deal by developed countries to consolidate the usurpation of taxing rights from source countries where the profits are generated. Developing countries should stand together and stop developed countries from making their deal a binding universal rule.”
Grazielle David, Global Advocacy and Campaigns Coordinator of the Global Alliance for Tax Justice said:
“This could have been a historic week for the tax justice movement and the world, but the European Parliament, Commission and Council opted earlier this week for a very limited country by country reporting, benefiting just the EU countries. And today the G7 reached an inefficient and unfair tax deal. Instead of putting an end to tax abuses by multinational corporations, the G7’s agreement establishes only a low ceiling, based on weak foundations, which will not fix the broken international tax system.
“The G7 opted for a very low global minimum corporate tax rate of 15 percent instead of 25 percent as demanded by ICRICT and other civil society organisations, which could have generated the much needed resources to tackle the socio-economic crisis triggered by the pandemic. The 15% rate will limit resource mobilisation even to the G7 countries. Also, the proposal will increase inequalities between countries with the taxing rights being disproportionately directed to high income counties. It is designed to tax the undertaxed multinationals’ global profits by the headquarter countries. These criterias only benefit high income countries. A fair apportionment would have recognised the legitimate share of the source countries’ in taxing undertaxed profits, by also considering where sales, employees and assets are.
“Multinational corporations must contribute with their share of taxes so we can build forward better, with a truly ‘strong, sustainable and inclusive global economic recovery’. International tax reform decisions must be taken at the UN, through a truly inclusive process in which all countries have the right to vote. These decisions evidently cannot be made by rich-country clubs, such as the OECD and the G7.”
About Global Alliance for Tax Justice
The Global Alliance for Tax Justice (GATJ) is a global coalition in the tax justice movement. We campaign for progressive and redistributive taxation systems nationally, and for a transparent, inclusive and representative global tax governance internationally, which ensures the right of developing countries to tax part of multinational corporations’ global profits generated in their economies.
Created in 2013, GATJ is the coordination hub of regional tax justice networks in Asia (Tax & Fiscal Justice Asia), Africa (Tax Justice Network Africa), Latin America (Red de Justicia Fiscal de América Latina y el Caribe), Europe (Tax Justice-Europe) and North America (Canadians for Tax Fairness & FACT Coalition), collectively representing hundreds of organisations.
For further information please contact:
Global Alliance for Tax Justice
+55 11 97548-675