The G-7 Nations Agree On New Tax Rules, but obstacles remain.
Under the deal, G-7 members will back a global minimum tax rate on company profits and a new way of sharing the revenues from taxing the world’s largest and most profitable companies.
The G-7, which comprises Canada, France, Germany, Italy, Japan, the U.K. and the U.S., agreed that businesses should pay a minimum tax rate of at least 15% in each of the countries in which they operate
The main aim of European countries has been to increase taxes on large digital businesses such as Google’s Alphabet Inc. and Facebook Inc., most of which are based in the U.S. To do that, an overhaul of the existing rules is needed, because they were designed for an age in which businesses had to have a large physical presence in a country—such as a factory—to be able to make profits there.
Obstacles in the US and EU
Perhaps US Senate Republicans will agree in the name of bipartisan cooperation, but don't count on it.
On May 24, Senator Mike Crapo (R., ID) , a ranking member of the Senate Finance Committee, sent Janet Yellen a Letter expressing concerns about Congress ceding U.S. taxing rights over profitable U.S. companies to foreign jurisdictions.
And Senate Republicans are not in favor of any tax hikes, but perhaps this idea eventually floats.
Regardless, to have much meaning, the tax haven countries and the G-20 would have to agree.
It will be interesting to see where this goes, if anywhere.