The G7, a group of seven countries made up of some of the world’s largest economies, has approved a new corporate tax.
In short, the new tax means that international companies will have to tax a larger portion of their income in the countries from which the income is generated. This could mean, for example, that Facebook, Google, Amazon, Apple and other large companies may have to pay more taxes in Sweden, for example, rather than shifting income to tax havens like Ireland.
According to the G7 proposal, international companies should pay a 20 per cent tax on revenue exceeding the 10 per cent profit margin in the countries where the revenue is generated. Moreover, countries will have to impose a tax rate of at least 15 percent on companies in order to prevent certain countries from operating in so-called tax havens.
However, it is unclear when the new tax legislation may take effect. It will likely take several years as the whole thing must also be cemented into, among other things, the so-called G20 and also require countries to write about their tax laws. In any case, it appears that it is a first step towards distributing tax revenues from international companies perhaps more equitably and that in the long run companies cannot escape paying taxes in the countries where they get their revenues.
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