The treasury has revealed that G7 finance ministers have agreed to back an historic international agreement on global tax reform.
As part of the deal, finance ministers agreed to the principle of a “global minimum rate” that ensures multinationals pay tax of at least 15% in each country they operate in.
Under pillar one of the agreement, the rules would apply to global firms with at least a 10% profit margin and would see 20% of any profit above that margin reallocated and then subjected to tax in the countries they operate.
Under pillar two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a “country by country basis”, creating a more level playing field for UK firms and cracking down on tax avoidance.
The fairer system will in turn mean that the UK will raise more tax revenue from large multinationals.
Furthermore, nations also agreed to follow the UK lead in making climate reporting mandatory, as well as measures to crack down on the proceeds of environmental crimes.
Rishi Sunak said: “These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer – creating a fairer tax system fit for the 21st century.
“This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”