THE G7 group of rich countries agreed to back a global minimum corporation tax rate of 15 per cent at the weekend — but tax justice campaigners said the rate was too low to tackle tax evasion.

The rate is significantly lower than the 21 per cent minimum originally proposed by US President Joe Biden, who has ended Washington’s longstanding hostility to internationally co-ordinated tax rates.

Finance ministers from the US, Japan, Germany, France, Britain, Italy and Canada said they had struck a “historic agreement” at the London-based summit. 

The US conceded that “the largest global companies” — a phrase whose definition has yet to be agreed — with profit margins of at least 10 per cent will in future have to allocate 20 per cent of their global profits to countries where they make their sales. 

The concession marks a major shift away from companies being taxed on profits only where they have a physical presence, something that disproportionately benefits the US as the home of most of the world’s biggest corporations.

In return, the other G7 countries agreed to impose the 15 per cent minimum, which Mr Biden’s government wants as a measure to crack down on firms avoiding tax by relocating to countries with lower rates.

Britain, France and Italy will drop new digital taxes that would mainly hit US firms like Amazon and Facebook in return, though not immediately as Washington originally wished.

Oxfam executive director Gabriela Bucher said the minimum rate was similar to “the soft rates charged by tax havens like Ireland, Switzerland and Singapore … they are setting the bar so low that companies can just step over it.”

Donald Trump cut the US corporation tax rate from 35 to 21 per cent, while in Britain it was slashed from 28 per cent to 19 per cent between 2010 and 2017, with Tory governments making up the losses with sweeping cuts to public spending and by raising indirect taxes which hit poorer people hardest.

Mr Biden aims to raise the rate in the US to 28 per cent, though has suggested he could compromise at 25 per cent in the face of Republican opposition in Congress.

No G7 country currently has a rate below the proposed minimum, which will be pitched at next month’s G20, a broader forum that includes non-US allies like China and Russia.