Japan’s Aso Sees ‘Historic’ G-7 Tax Deal Driving Global Accords

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The Group of Seven’s tax deal over the weekend has sent a big message around the world that improves the prospects of wider global accords on taxation, according to Japanese Finance Minister Taro Aso.

“The fact the G-7 has shown the direction forward means there’s a higher possibility we’ll get an agreement at the G-20 level,” Aso told reporters in Tokyo on Tuesday, after returning from the meetings in London.

Japan’s Aso Sees ‘Historic’ G-7 Tax Deal Driving Global Accords

Aso said Japan had been looking for this kind of progress for almost a decade and described the deal as a historic achievement that will help drive talks at the G-20 finance ministers in Italy and long-running negotiations between about 140 countries at the Organization for Economic Cooperation and Development.

“Japan proposed this kind of idea nine years ago in May at the G-7 meeting in Buckinghamshire,” Aso said. “While almost all the countries saw this issue as a big problem, they said it needed dealing with by all nations and they were extremely reluctant to respond.” German’s then-Finance Minister Wolfgang Schaeuble was the only exception, he said.

The biggest factor behind the success of reaching the agreement at the weekend was the impact of the pandemic on the U.S. and the squeeze seen around the world as countries struggled to deal with big falls in tax receipts and huge demand for spending measures, he said. That drove critical momentum for action as nations realized that the race to the bottom on corporate taxes was no longer sustainable, he added.

“Some firms will likely think there’s no longer any point in keeping their headquarters in a country with lower corporate taxes and move,” he said. “Corporate behavior is going to change.”

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