The G7 leaders summit convenes in the UK at the end of this week, with PM Scott Morrison going along. But the warm-up act of finance ministers came out with a bang yesterday with a landmark deal. The wealthy nations – the US, UK, France, Germany, Canada, Italy and Japan, plus the European Union – have agreed on an Organisation for Economic Co-operation and Development (OECD) plan to make multinational companies pay more tax in the countries where they do business, rather than wherever they end up declaring their profits. The agreement would see the global minimum corporate tax rate set at 15% in a reform G7 nations hope could be adopted worldwide.

SORRY, YOU JUST PUT ME BACK TO SLEEP…
Well, get excited because it means multinational corporations operating in Oz would not be able to avoid paying more tax here if the deal is implemented. Take, for example, the last company to hit the media over this very issue – Facebook. In its recent 2020 financial year filing with Aussie regulators, the social media giant said it collected $712.7 million in revenue here. Through a complicated web of financial arrangements, it paid tax of $20 million. There’s no suggestion it did anything against Australia’s tax rules, and Facebook is one example of many – but plenty of local businesses and others say it’s not right and the system has to change.

I’M PUMPED. ARE WE DOING THIS?
The critics aren’t convinced. The ones representing big business saying 15% tax is too high weren’t vocal, strangely enough. But those saying it’s too low were out and about. Oxfam said the G7 has set the bar “so low that companies can just step over it.” But the UK’s Chancellor Rishi Sunak, who hosted the summit, said the agreement would create “a fairer tax system fit for the 21st Century”. And US Treasury Secretary Janet Yellen said that a “global minimum tax would end the race-to-the-bottom in corporate taxation” that sees nations like Switzerland (with its corporate tax rate of 8.5%) and Ireland (12.5%) preferred as corporate headquarters for tax purposes than the US (21%), for example. For comparison: Australia’s corporate tax rate is 30% – the 2nd-highest of OECD nations.