A group of the richest countries in the world has agreed on a minimum global corporate tax rate to close the cross-border taxation loopholes used by some companies.

The finance ministers of the Group of Seven (G7) wealthy countries reached a landmark agreement on Saturday to support setting the world’s minimum corporate tax rate at at least 15% to bridge the cross-border tax loophole used by some companies.

The Group of Seven countries said in a statement at the end of the London meeting: “We…commit to impose a minimum global tax of at least 15% by country.”

The goal of major economies is to prevent multinational companies from transferring profits and taxes to low-tax countries, no matter where they are sold.

Revenues from intangible sources such as drug patents, software and intellectual property royalties are increasingly being transferred to these jurisdictions, enabling companies to avoid paying higher taxes in their traditional home countries.

The G7 agreement provides support for a wider range of existing efforts. Over the years, the Organization for Economic Cooperation and Development has been coordinating tax negotiations among 140 countries on taxation of cross-border digital services and rules to curb tax base erosion, including the global corporate minimum tax.

It added that the G7 hopes to reach a final agreement at the enlarged G20 Finance Ministers’ Group meeting in July. If a broad consensus is reached, it will be difficult for any low-tax country to prevent an agreement from being reached.

“I am happy to announce that the G7 finance ministers… have reached a historic agreement on reforming the global tax system,” said British Finance Minister Rishi Sunak, who personally presided over the relaxation of COVID-19 restrictions. Two-day talks. .

Colleagues from Canada, France, Germany, Italy, Japan and the United States attended the meeting.

Sunak stated that the G7 has agreed to make the global tax system “suitable for the global digital age, and it is vital to ensure that it is fair so that the right companies pay the right taxes in the right place”.

He thanked his colleagues for reaching “a historic transaction that finally brought our global tax system into the 21st century.”

This landmark move aims to allow multinational companies, especially tech giants, to pay more money to government coffers that have been hit hard during the pandemic.

The talks laid the foundation for a broader summit of G7 leaders to be held in Cornwall, southwest England, on Friday.

US President Joe Biden will attend the summit next week. This is his first visit since taking office in January. Later on Saturday, US Treasury Secretary Janet Yellen will hold a press conference after the G7 meeting.