London (CNN) – Finance ministers from the Group of Seven (G7) meeting in London on Saturday agreed to endorse a Lowest tax in the world At least 15% for multinational companies. The G7 also agreed that big companies should pay taxes wherever they generate sales, not just where they have a physical presence.

British Finance Minister Rishi Sunak announced the deal via video Posted on Twitter This Saturday, he said that the G7 finance ministers — from Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — “reached a historic agreement for the reform of the global tax system to bring it into play. Crucial, make sure it’s fair for the right businesses to pay the right taxes in the right places.

The deal was sealed during a meeting of G7 finance ministers in London, attended by US Treasury Secretary Janet Yellen, who requested support for the administration’s efforts to rewrite international financial rules and discourage US companies from posting profits abroad.

Yellen said Saturday that the agreement is an “important and unprecedented commitment” by the world’s richest economies, aimed at preventing companies from avoiding taxes by shifting their profits abroad.

“G7 finance ministers have made an important and unprecedented commitment today that provides tremendous impetus to achieving a strong global minimum tax rate of at least 15%,” Yellen wrote in the statement.

“The global minimum tax would end the race to the bottom in corporate taxation and ensure fairness for the middle class and workers in the United States and around the world,” he said. He added that the tax would also create “the playing field for business and encourage countries to compete on positive grounds such as educating and training our workforce and investing in research and development and infrastructure.”

Tech giants like an AppleAnd the Facebook social networking site s The Google can be affected by the agreement. Foreign governments have long complained that big digital companies must pay more taxes. Some have recently issued taxes specifically targeting revenue generated by such companies, including US-based companies such as Facebook, Google, and Amazon.

Nick Clegg, Facebook’s vice president of global affairs, said in a statement that the company “has long advocated reform of global tax rules.” “We welcome the significant progress that has been made in the G7,” he added.

“We want international tax reform to succeed, and we understand that this could mean that Facebook pays more taxes and in different places,” Clegg added.

Google said it strongly supports the work done to update international tax rules. Google spokesperson José Castañeda said in a statement to CNN that the company hopes that “countries will continue to work together to ensure that a balanced and lasting agreement is concluded soon.”

An Amazon spokesperson said: “We believe that the OECD-led process creating a multilateral solution will help stabilize the international tax system. The G7 agreement represents a positive step in efforts to achieve this goal. We look forward to seeing the discussions continue moving forward. With the broader G20 Alliance and Comprehensive Framework for Action.

US Treasury Secretary Janet Yellen speaks during a press conference after attending the meeting with G7 finance ministers on June 5, 2021 in London, England. Credit: Justin Thales – WPA Pool / Getty Images

Consensus building

The agreement represents a major victory for the Biden administration ahead of next week’s G7 leaders’ summit in Cornwall, demonstrating an initial ability to build consensus in the group.

Led by Yellen, the United States had been pushing hard for such an agreement before the G7. While this is separate from the minimum US corporate tax of 15% that Biden has proposed as part of ongoing infrastructure negotiations, officials see it as a critical component of their broader tax agenda.

Biden’s plan to push at least $1.4 billion in new infrastructure spending depends in large part on getting support Lowest tax in the world For companies to increase payments to the treasury.

Setting a lower rate can help deter companies from shifting their profits to countries where they pay lower taxes.

Saturday’s agreement could help speed up parallel tax negotiations between nearly 140 countries led by the Organization for Economic Co-operation and Development (OECD).

OECD Secretary-General Matthias Kormann welcomed Saturday’s announcement, calling it a “historic step towards the global consensus needed to reform the international tax system.” In the statement, he added, the decision added an “important boost” to upcoming parallel tax negotiations.

Ireland, which has successfully hired international companies – including major US tech companies – by offering a corporate tax rate of just 12.5%, is one of the countries that has expressed significant reservations about Biden’s proposal.