G7 Inks New Taxation Deal, What is in it for Crypto Firms?
Godfrey Benjamin Jun 07, 2021 10:30
G7 has entered a new Tax arrangement that may impact crypto companies operating globally.
The institution of seven leading industrial countries, known as the Group of Seven (G7), has agreed to request multinational corporations (MNC) to pay more taxes.
According to a BBC report, the countries including the United States, United Kingdom, Germany, Italy, France, Canada, and Japan agreed in principle on a minimum tax rate of at least 15% for big firms operating in various locations worldwide. Some of the firms billed to be impacted include but not limited to Facebook, Amazon, Microsoft, Spotify, and others.
The deal was agreed upon to forestall the use of “Tax Havens,” or countries that offer very low corporate taxes to evade paying taxes by these firms. Based on the new deal, companies will now pay more taxes in regions where they do business, a deviation from the norm in which firms can declare their profits where they are most at an advantage.
The deal will now be proposed to the G20 with anticipation by other big names, including China, Russia, and Brazil, to sanction the move in a bid to take it global.
How Does This Affect the Crypto Ecosystem?
There are emerging companies in the digital currency ecosystem that are set to be impacted by this new arrangement. As the industry matures, we have started seeing firms offering core digital currency services debuting nationally recognised stock exchanges such as Coinbase Global Inc, with more others in the pipeline.
Per the new taxation deals, blockchain and cryptocurrency-centric firms will also not have tax havens as the likes of Binance exchange have been accused of evading taxes. The areas where they do businesses are the areas they will get to pay more taxes, a move that will become more pervasive if the decision is made global.
Like the other multinational companies like Facebook, crypto firms will also continue their business as usual, except they may need to pay more taxes than they have done.
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