Global plans to ensure that big international companies such as Amazon and Google pay their "fair share of tax" have passed another hurdle following a meeting in Venice of the world's leading finance ministers.
In June, the G7 group of nations threw its weight behind proposals to change international tax rules.
At the weekend, finance ministers of the G20 – an economic group that represents 19 countries and the European Union, accounting for more than 80 per cent of world GDP and 75 per cent of global trade – gave their backing to the new tax proposals.
If adopted, it would go some way to ensure that large multinationals pay their fair share of tax in the countries they do business and introduce a global minimum rate that ensures companies pay at least 15 per cent tax on profit in each country they operate.
The proposals – which have taken years to reach this point – have been described as "historic" leading to a "seismic shift" in the way companies that operate around the globe are taxed.
To ensure that momentum is not lost, finance leaders called for the new rules to be ratified by October and for nations that have failed to sign up so far to do so.
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The proposals are designed to end situations where companies can make profits in one country and shift them to another where tax rules are more generous.
In a statement, the UK's Chancellor, Rishi Sunak, reiterated the point that the global tax system must be "fit for purpose in a digital age."
"We must continue to build on this momentum over the coming months and work together as an international community to create a fairer tax system, which cracks down on tax avoidance and levels up our high street," he said.
His comments were echoed by Janet Yellen, the US Secretary of the Treasury, who said that when it comes to the introduction of a global corporation tax, there was now a "broad consensus about how to do it."
The European Commission – which also attended the meeting – gave its backing to the new tax plans which it said would "bring fairness and stability to the international corporate tax framework" and usher in a "complete reform of the international corporate tax system."
Despite the coordinated public support, finance ministers and world banking officials still have much to do before the proposals are adopted. ®