10 June, 2021
Last week, the G7 made a landmark deal that seeks to make multinational companies pay more tax, including agreeing, in principle, to a 15% global minimum corporate tax rate. As ever, with all things tax related, the devil is in the detail, and there’s much left to play out.
Could the fact that the deal only applies to companies with a 10% profit margin mean Amazon won’t be in scope? Will Sunak succeed in gaining exemptions for City of London financial services firms? What does ‘very large firms’ actually mean?
And at the moment, the deal is amongst the G7 – the broader G20 group of nations still needs to hammer out the details. But one thing is certain – alongside life, death and taxes, comes tax avoidance. So, if the system changes, avoidance approaches will too.
This means that regulation alone is unlikely to create the change we need. Companies will find ways around the letter of the law, and undercut its spirit.
We believe we need a concerted effort, from all forces in society, to reignite the moral arguments around taxation and make it reputationally impossible to dodge and dive. This would combine with the regulation to create the circumstances for actual and sustained change.
We need consumer pressure (think back to the noise UK activist group, Uncut made a few years ago) shareholder activism, NGO campaigning, and media attention. Tax transparency is imperative, so that businesses can be held to account.
Paying tax is one of the most fundamental responsibilities a company has. Tax is the foundation of a just society that protects all individuals, and it ensures the social infrastructure on which we all rely. The results of the last year have thrown that into sharp relief, as the government stepped in with its multi-billion pandemic relief package.
Our hope is that the latest deal put paying one’s taxes firmly on the agenda, and everyone else rises to do the rest.
By Jennie Mitchell