Anti-poverty activists slammed a deal struck by seven wealthy countries to impose a minimum tax on multinational corporations on Monday, claiming it will enrich the wealthy at the expense of the poor.
Finance Ministers from the Group of Seven advanced economies agreed on Saturday to support the creation of a global minimum corporate tax rate of at least 15%, with the goal of extracting more money from multinational corporations like Amazon and Google and reducing their incentive to shift profits to low-tax offshore havens.
Oxfam and Eurodad, a network of development agencies, said the new regime would entitle big companies’ home countries, often in the United States or Europe, to a larger share of the tax, leaving little for poor states where multinationals also operate.
“The G7 is a small club of wealthy and powerful nations,” said Eurodad’s Tove Ryding. “They have a strong desire to stand together. They’ve signed a contract that favors them.”
“It is obviously biased to the rich and unfair on the poor,” Christian Hallum, an Oxfam tax specialist, said.
“This will see a big flow of money to rich countries,” he added, adding that a country holding a company’s headquarters has more clout in the program.
The Tax Justice Network, a reform advocacy group, repeated this critique, claiming that the arrangement was unjust.
Eurodad’s Ryding said that although many smaller countries might be pressured into accepting the terms, larger ones such as India could resist.
The Organization for Economic Co-operation and Development, which helped drive wider tax reform, denied the deal would unfairly benefit the United States.
According to a recent study, if a minimal global corporate tax of 15% is agreed upon, the European Union might gain an additional 50 billion euros in tax revenue.
The plan is part of a rethinking of regulations for taxing multinational corporations and large internet companies like Alphabet and Facebook, which now pay relatively little tax despite large earnings by establishing headquarters in low-tax nations like Ireland, Luxembourg, or the Netherlands.