Rishi Sunak has doubled down on a commitment to establish a new global tax on tech firms in the coming months following years of conflict over a new regime targeting Silicon Valley.
In a G7 meeting today the chancellor said the new digital tax framework was a “key priority” and called on member nations to reach an “enduring multilateral solution” by the mid-2021 deadline set by the G20.
During the meeting, which was the first under the UK’s presidency this year, Sunak called for cooperation between the G7 and G20, as well as the Organisation for Economic Co-operation and Development (OECD).
The OECD has been leading discussions between roughly 140 countries amid complaints tech giants were not paying their fair share of tax.
But the talks have proved divisive, with European countries frequently clashing with Donald Trump’s administration over how US tech companies should be taxed around the world.
The US last year pulled out of the OECD talks, while discussions have also been threatened by individual countries introducing their own tech taxes.
In April last year the government introduced a digital services tax, charging a two per cent levy on the UK revenues of search engines, social media platforms and online marketplaces. France has also pushed ahead with its own tax on tech giants.
But the change of administration in the US has reignited hopes of reaching a global agreement, which are expected to usurp the levies introduced by individual countries.
In calls with Sunak and German counterpart Olaf Scholz last month, treasury secretary Janet Yellen said the US would cooperate with discussions and vowed to find a solution to “efficiently and equitably taxing the income of multinational firms”.
During the G7 meeting today, which was co-hosted by Bank of England governor Andrew Bailey, the countries also discussed measures for supporting the global recovery from Covid-19, rolling out vaccines worldwide and meeting climate change targets.