G7 deal on minimum global corporate tax

• The Group of seven (G-7) advanced economies has secured a landmark deal on taxing multinational companies as per which the minimum global tax rate would be at least 15 per cent.
• Agreement was signed by finance ministers of United Kingdom, United States, Germany, Canada, France, Italy and Japan. It opens way for levies on multinational companies in countries where they operate rather than just where they are headquartered.
• Old system of global taxation was being criticized over the years as it allowed big companies to save billions of dollars in tax bills by shifting their jurisdictions. Major digital companies were making money in multiple countries and paying taxes only in home country. Thus, this proposal was made which would impose an additional tax on several multinational companies and technology giants like Facebook, Amazon and Google to pay taxes to countries based on where their goods or services are sold irrespective of their physical presence there. The deal seeks to modernize century-old international tax code.

Group of Seven (G7)

• It is an intergovernmental organisation that was formed in 1975.
• The bloc meets annually to discuss issues of common interest like global economic governance, international security and energy policy.
• The G7 countries are the UK, Canada, France, Germany, Italy, Japan and the US.