The Group of Seven (G7) advanced economies agreed on Saturday to back a minimum global corporate tax rate of at least 15% and the focus now shifts to the G20 countries for a wider agreement on the new tax proposals.
Analysts say the tax deal wouldn’t hurt companies unless it’s agreed with tax-haven countries such as Ireland, whose economy has been booming with the influx of billions of dollars in investment from multinationals due to lower taxes.
Shares of Facebook, Amazon.com, Apple , Microsoft and Google-parent Alphabet were all down between 0.4% and 0.7%. Europe’s tech stocks index was flat.
“The details of the implementation are still to be ironed out and potentially further watered down,” said Marija Vertimane, senior strategist at State Street Global Markets.
Dublin, which has resisted European Union attempts to harmonize its tax rules, is unlikely to accept a higher minimum rate without a fight.
“I would treat the current proposal as a small positive for the market,” Vertimane added pointing to levies being lower than what was initially discussed.
The G7’s proposals are seen targeting technology companies that sell services remotely and attribute much of their profits to intellectual properly held in low-tax jurisdictions.
“The immediate market implications are likely to be minimal,” said Ian Williams, economics & strategy research analyst at Peel Hunt.
“No G7 nation currently charges that low a rate and the details, including agreement from numerous smaller countries, require plenty of work.”
