The Group of Seven or better known as G7 members met on 5th June and finalised an international agreement with regard to the global tax reforms. The group comprises of the United Kingdom, Canada, France, Germany, Italy, Japan and the United States. According to the deal, the multi-national technical companies will from now on pay their share of taxes in the countries that they operate and not just in the place with their headquarters. The countries agreed to the payment of at least 15% tax which they set as a global minimum rate. Another important aspect was the mandate to declare the climate impact of the decisions taken by the multinational giants.
The new norms of tax payment will help the host countries to generate more revenue than before. The rule applies to companies that show at least 10% profit margin and will have to reallocate 20% of any profit above the 10% margin in the country where they operate. This proposition was under consideration for many years and will now be officially discussed in July at the G20 meet in Venice.
In addition to the tax reforms, the G7 resolved to help the vulnerable countries in overcoming their health and economic challenges. There was a decision taken to accelerate the production of antibiotics in order to prevent anti-microbial diseases. Moreover in the current context, the relevance of vaccines production was also highlighted. The importance of private sector in the pharmaceutical industry was talked about and efforts by G7 countries to help the poor countries in obtaining medical competency was considered.
These decisions have several connotations. One, it brings in a novel idea that will help in the global economic recovery. This is bound to be followed by other countries too. The Middle East is a site for many investments and can follow along the same lines. The next thing to be noted is the idea of a combined western rise in the road to economic recovery. The economic problems due to the pandemic have been a source of concern to countries all around the world. This was even more important due to the group dynamics and the fear of a Chinese emergence in the global market. The deal looks promising for the member countries and the fairer tax system that it propagates has enjoyed much attention.
