On 5 June 2021, the finance ministers of the Group of Seven promised to impose a global minimum corporate tax rate of at least 15% on multinational enterprises. Although there are still many details to be settled in the wider global discussion, this historic agreement embodies an important step forward in the reform of international enterprise tax.
The idea of a minimum tax rate is not new. At the national level, since the 1960s, countries have been using modern forms of minimum tax rates to impose tax on the enterprises which operate within their territories. The goal of "domestic minimum tax" is to prevent the abuse of "tax preference" which will lead to the erosion of tax base. In the past few decades, countries have been reducing tax rates to attract the investment of enterprises, resulting in multinational companies depositing more and more of their profits in overseas tax haven to avoid tax reasonably where there is few real economic activities. According to the estimation of the Organization for Economic Cooperation and Development (0ECD), multinational enterprises reduce their tax burden by transferring income among countries, leading to an annual loss of up to US $240 billion to governments around the world.
On 10 March 2019, the International Monetary Fund (IMF) issued a policy paper "Cooperate Taxation in the Global Economy", which listed the “minimum tax scheme” as an important plan to solve the current harmful tax competition and profit shifting. From March 13 to 14, 2019, OECD public consultation on the tax challenges of digitalisation also discussed the "minimum corporate tax scheme" as the second pillar to solve the digital economy tax problem, which is also known as the "Global Anti-Base Erosion Proposal". This is the first time that the scheme has been officially announced and widely concerned by enterprises and academia. There are 137 countries around the world attempting to solve the problem of corporate taxation in the development of global digital economy, and actively participating in the negotiation on the reform of "minimum corporate scheme".
However, due to the great divergence of positions and opinions among countries, especially on account of the large number of technology-based multinational enterprises in the United States, Trump administration proposed whether companies should have the right of self-determination to join the new system. Therefore, the negotiation came into a deadlocked. At the G7 finance ministers' meeting, they took the initiative to unify the global minimum corporate tax rate to 15%, which brought a turning point to the implementation of the "global minimum corporate tax scheme".