Amazon and Facebook to fall under new G7 tax rules

A visual logo of Amazon and Facebook. Source: FILE/Online.

SAN FRANCISCO: Both Amazon and Facebook will fall under new proposals for a global minimum corporation tax agreed by the Group of Seven, United States Treasury Secretary Janet Yellen said.

Asked whether the two companies would be covered by the proposal, Yellen said: “It will include large profitable firms and those firms, I believe, will qualify by almost any definition.”

The joint statement by G7 finance ministers earlier on Saturday said it would tackle tax avoidance by “the largest and most profitable multinational enterprises”.

Amazon has lower profit margins than most other tech companies, and European countries had been concerned it would escape extra taxation under initial US proposals to the G7.

Facebook welcomed the progress made by the Group of Seven on a minimum tax rate and accepts this could mean the social network pays more tax, and in different places, its head of global affairs Nick Clegg said.

“Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G7,” Clegg said on Twitter. “Today’s agreement is a significant first step towards certainty for businesses and strengthening public confidence in the global tax system. “We want the international tax reform process to succeed and recognize this could mean Facebook paying more tax, and in different places.”

READ MORE: G7 nations reach historic agreement to tax tech giants, multinationals

Finance ministers from G7 nations endorsed a global minimum corporate tax rate of at least 15 percent, rallying behind a US-backed plan targeting tech giants and other multinationals accused of not paying enough.

US Treasury Secretary Janet Yellen hailed the “unprecedented commitment”, saying in a statement that a global minimum tax “would end the race to the bottom in corporate taxation”. Facebook even got behind the move despite the social media giant facing the prospect of having to pay more tax — while non-governmental organisations said it did not go far enough.

Following the two-day gathering in London, the G7 said in a final communique that it will “commit to a global minimum tax of at least 15 percent on a country by country basis”.

The G7 — comprising Britain, Canada, France, Germany, Italy, Japan and the United States — said it hoped to reach a final tax agreement at the July gathering of the expanded G20 finance ministers group.