MEDIA RELEASE : G7 tax deal could let big fish off the hook

For immediate release: 8 June 2021
 
OTTAWA - Many of the biggest corporations in the world - including Amazon - could be left off the hook in the tax deal proposed by G7 Finance Ministers.
 
The agreement outlined by the G7 group of countries would award taxing rights on at least 20% of profit exceeding a 10% profit margin for large multinational enterprises to the countries where their sales are made. However, many large tax-dodging corporations like Amazon routinely record profit rates of less than 10% while also paying very low rates of tax.  This means Canada and other countries might not be able to collect corporate taxes from them under this proposed deal.
 
“We’re glad that the G7 Finance Ministers are determined to achieve some reforms, but they and the OECD will have to be much more ambitious to really make a significant difference,” said Toby Sanger, Executive Director of Canadians for Tax Fairness.
 
“If tax-dodging behemoths like Amazon can still get off tax-free, the deal is a fair tax flop,” said C4TF Policy Researcher D.T. Cochrane.
 
Instead of allocating only 20% of the profits above 10% of highly profitable multinationals to countries on a formulaic basis, while leaving the rest under our existing broken system, real reform would have allocated ALL the profits of large multinationals to different countries, in line with their real economic activities in each country (i.e. employment, sales and assets), just as Canada allocates taxable profit between provinces.
 
G7 Finance Ministers also committed to applying a 15% global minimum corporate tax on the foreign profits of large multinationals, close to the rates of tax havens such as Ireland or Switzerland. 
 
“Canada should follow President Biden’s lead, and push for at least a 21% minimum global corporate tax rate, and preferably 25%, as the Independent Commission for the Reform of International Corporate Taxation has proposed,” said Sanger. 
 
Canadians for Tax Fairness released a report in April which estimated that Canada could gain at least $11 billion annually with a global minimum corporate tax rate of 21% and about $20 billion with a rate of 25%.
 
“While Canada has much to gain from a better global deal, it is critical that any deal is also much better for lower income countries,” said Sanger. “Lower income countries in the Global South have suffered the most from a broken international corporate tax system. This reform package must ensure they receive a larger share of the revenues and that their views are reflected in the outcomes. A global deal must involve the meaningful participation of countries around the globe and not just the seven wealthiest - and it should be much more ambitious than this,” concluded Sanger.
 
MEDIA CONTACTS
  1. Darren Shore, Communications Coordinator, C4TF; 438-880-1114; darren.shore@taxfairness.ca
  2. Toby Sanger, Executive Director, C4TF; 613-720-6955; toby.sanger@taxfairness.ca
 
 
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