The finance ministers from the worlds most powerful and wealthiest nations have committed to a global minimum corporation tax rate of 15%.
The aim of the move is to level out the international playing field and force wealth corporations to pay more tax to governments, particularly coming out of the Covid-19 crisis.
The G7 hopes to finalise the plans at July meeting between the G20 finance ministers.
“I’m delighted to announce that G7 finance ministers have reached a historic agreement to reform the global tax system,” Minister for finance in Britain Rishi Sunak said.
The United States, Canada, the United Kingdom, France, Italy, Germany and Japan were present at the meeting.
Ireland’s minister for finance, Paschal Donohoe, was also attending the meeting as the current president of the Eurogroup.
This global initiative will directly affect Ireland, due to the 12.5% corporation tax.
Ireland’s multinational tax practices was a strong feature of the global initiative of 15% corporation tax.
However, multinational companies, in particular tech companies such as Facebook, Google and Apple, reside in Ireland largely due to the corporation tax.
Thousands of people in Ireland are employed by these multinational companies and a rise of corporation tax to a global standard could result in these companies withdrawing from Ireland.
Paschal Donohoe said Ireland has serious reservations about Joe Biden’s global tax proposals, and said Ireland wishes to keep the corporation tax level at 12.5%.