G7 Tax Agreement: What is and is Amazon and Facebook included?

G7 Tax Agreement: What is and is Amazon and Facebook included?

image copyrightGetty Imagesimage captionFacebook’s HQ in Dublin A group of the world’s richest nations has agreed to make multinational businesses such as Amazon and Facebook pay more tax.

By Michael RaceBBC News Published12 minutes agoSharecloseShare pageCopy linkAbout sharingRelated Topics The plan, by the G7 (Group of Seven), also aims to stop the world’s largest companies avoiding tax by moving their operations between countries.

How would the deal work? There are two parts to the deal, which will be signed by the G7 nations (Canada, France, Germany, Italy, Japan, the UK and the US) at a summit in Cornwall this weekend.

Firstly, multinational companies – which operate in several countries – would have to pay more tax wherever they sell products or services. At the moment, a company can earn billions in a particular country but still pay very little tax there. This is because they can choose to put their headquarters in a country with a lower tax rate and take their profits there. For example in 2018, Facebook, which has its international HQ in Dublin, paid £28.5m in tax to the UK, although its revenue was £1.65bn.

However, under the G7 deal, companies could be taxed in any country where they make more than 10% profit on sales. Above that point, the company would have to pay 20% tax. The deal is “all about changing which country gets to tax the companies”, says Chris Sanger, head of tax policy at accountancy firm EY.

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