Small Wars Journal

Plutocratic Insurgency Note 13: The Liberal-Democracies Strike Back – Countering Extra Sovereign Corporate Tax Avoidance

Wed, 06/30/2021 - 9:03pm

Plutocratic Insurgency Note 13: The Liberal-Democracies Strike Back – Countering Extra Sovereign Corporate Tax Avoidance   

Pamela Ligouri Bunker and Robert J. Bunker

For many years, multinational corporations have been playing revenue starved liberal-democratic states off against one-another in a ‘race to the bottom,’ driving tax rates down, leveraging tax havens, and engaging in complex transnational tax avoidance schemes. In response to these ongoing corporate profiteering excesses and attempts at achieving extra sovereign impunity, the finance ministers of the G7 states recently gathered together in London and reached an historic agreement on a global minimum corporate tax rate.

G7 Tweet 2

@G7, Retweet of @hmtreasury Tweet, 5 June 2021.


G7 Tweet

@G7, Tweet, 5 June 2021.


Key Information: David J. Lynch, “Biden set for G-7 boost in bid for all nations to impose minimum global corporate tax.” Washington Post. 1 June 2021,

…The new minimum tax, one half of a two-pronged global reform effort, is designed to halt a cycle of corporate tax-cutting that has sapped government revenue around the globe. As part of a package deal, negotiators are also wrestling with European demands to tax American technology giants such as Google and Facebook, which earn substantial revenue in countries where they have little physical presence…

…Under the auspices of the Organization for Economic Co-operation and Development (OECD) in Paris, 137 nations have been wrestling since 2013 with the question of how to tax corporations in a globalized, digital economy…

…Corporate accountants easily shift income on paper to low-tax jurisdictions such as Ireland, the Cayman Islands or Bermuda: 40 percent of the profits multinationals earn outside their home country are “artificially shifted to tax havens,” according to a 2018 study by Gabriel Zucman, an economics professor at the University of California at Berkeley, and Ludvig S. Wier and Thomas R. Tørsløv, both of the University of Copenhagen…

Key Information: “Rich nations ‘millimetre away’ from tech tax deal.” BBC News. 5 June 2021,

A global agreement to end the “race to the bottom” on corporate taxation is within sight, according to the French and German finance ministers.

France’s Bruno le Maire told the BBC the G7 club of rich nations were “just one millimetre away from a historic agreement” on a global minimum rate.

He urged low tax states like Ireland to back a deal which would target tech giants such as Amazon and Microsoft.

The German finance minister said a 15% rate would help pay back Covid debt.

Tax on big tech and multi-nationals has been a source of friction between the US and fellow G7 countries such as the UK.

German finance minister Olaf Scholz said it was important to stop the world's biggest companies from dodging tax.

He said it was “absolutely necessary” to reach a deal in order to “get out of this race to the bottom we see with taxes today…especially after the Covid crisis and all the money we spent to defend the health of the people, and to defend the economy.”…

…The ministers will be looking at how to stop the likes of Google, Amazon, Starbucks and Apple paying low or no taxes in countries where they generate revenues.

The meeting is being held as it emerged that an Irish subsidiary of US technology giant Microsoft paid no corporation tax on $315bn in profit it made last year, according to The Guardian.

Key Information: “G7: Rich nations back deal to tax multinationals.” BBC News. 5 June 2021,

Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business.

They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.

Tech giants Amazon and Facebook are among those likely to be affected

…Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.

That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly the G7 will aim to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, they want a global minimum tax rate so as to avoid countries undercutting each other with low tax rates…

Key Information: David Milliken and Kate Holton, “Tech giants and tax havens targeted by historic G7 deal.” Reuters. 5 June 2021,

The United States, Britain and other large, rich nations reached a landmark deal on Saturday to squeeze more money out of multinational companies such as Amazon and Google and reduce their incentive to shift profits to low-tax offshore havens.

Hundreds of billions of dollars could flow into the coffers of governments left cash-strapped by the COVID-19 pandemic after the Group of Seven (G7) advanced economies agreed to back a minimum global corporate tax rate of at least 15%.

Facebook (FB.O) said it expected it would have to pay more tax, in more countries, as a result of the deal, which comes after eight years of talks that gained fresh impetus in recent months after proposals from U.S. President Joe Biden's new administration.

“G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” British finance minister Rishi Sunak said after chairing a two-day meeting in London…

…Current global tax rules date back to the 1920s and struggle with multinational tech giants that sell services remotely and attribute much of their profits to intellectual property held in low-tax jurisdictions.

Nick Clegg, Facebook’s vice-president for global affairs and a former British deputy prime minister, said: “We want the international tax reform process to succeed and recognise this could mean Facebook paying more tax, and in different places.”…

Key Information: Alan Rappeport, “Finance Leaders Reach Global Tax Deal Aimed at Ending Profit Shifting.” New York Times. 5 June 2021,

LONDON — The top economic officials from the world’s advanced economies reached a breakthrough on Saturday in their years long efforts to overhaul international tax laws, unveiling a broad agreement that aims to stop large multinational companies from seeking out tax havens and force them to pay more of their income to governments…

Finance leaders from the Group of 7 countries agreed to back a new global minimum tax rate of at least 15 percent that companies would have to pay regardless of where they locate their headquarters.

The agreement would also impose an additional tax on some of the largest multinational companies, potentially forcing technology giants like Amazon, Facebook and Google as well as other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation…

…She [Treasury Secretary Janet L. Yellen described the agreement as “significant” and “unprecedented.”

“That global minimum tax would end the race to the bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world,” she said in a statement…

…The joint statement, or communiqué, released on Saturday suggested that the digital taxes would remain in place for now.

“We will provide for appropriate coordination between the application of the new international tax rules and the removal of all digital services taxes, and other relevant similar measures, on all companies,” the statement said.

Key Information: Richard Partington, “G7 deal is as much about balance of power as global tax reform.” The Guardian. 7 June 2021,

…After meetings in London at the weekend, the message from the G7 group of wealthy nations is clear: time is up on tax havens. In a landmark move, a global minimum rate of corporation tax has been agreed, alongside measures forcing large firms and online tech giants such as Facebook, Apple and Google to pay more tax in the markets where they make their money regardless of physical presence…

…Despite the historic milestone, the London agreement is about far more than just tax. That will become clearer when Boris Johnson, Joe Biden and the other heads of G7 governments meet at Carbis Bay in Cornwall later this week.

As with most global negotiations, the real story is about who holds the balance of power and the reconciling of domestic interests with international demands. For the G7 – made up of the US, Canada, UK, Germany, France, Italy and Japan – it is no different…

…In the wake of the Covid-19 pandemic, and after decades of neoliberal politics lining the pockets of the few rather than the many, the underlying message of the G7 deal is also about reasserting the power of government over big business. Sources close to the talks said there was broad agreement that, for now at least, soaring budget deficits incurred during the pandemic matter far less than a sustainable recovery – raising the prospect that big state economics will be a lasting legacy of the pandemic…

…However, public opinion after the pandemic has shifted to the point where these concerns are irreconcilable. Long before Covid-19 no one could understand why the biggest companies paid less tax because of loopholes in the system of international tax – a system built on neoliberal ideals.

Before the crisis it was difficult to understand; after the crisis it is impossible to accept.

Who: The Group of Seven Nations or G7 (the United Kingdom, France, Germany, Italy, Canada, Japan, and the United States); the leading liberal-democratic states across the globe. 

What: An historic agreement to levy a minimum 15% corporate tax on multinational companies with a profit margin exceeding 10%, to be levied in the countries in which the profit is generated.

When: The initial meeting took place on 28 May 2021 with a follow-on meeting then having taken place on 4-5 June 2021.

Where: The G7 Finance Ministers and Central Bank Governors initially met virtually while the Finance Ministers physical meeting took place in London, UK.

Why: Liberal-democratic states are being ‘hollowed out’ economically with an increasing inability to provide public goods and services to their citizenry due to rampant multinational corporate and global economic elite tax avoidance coupled with the severe financial strains imposed by the COVID-19 pandemic. In response, the leadership of the most powerful of these states, spurred by the recent change in US presidential administration, are now reasserting their sovereign rights for the benefit of the people.    

Analysis: For years, international tax laws have allowed large multinational corporations to seek out tax havens, artificially claiming their income in low or no-tax areas instead of the locations in which it was generated. These laws are archaic in nature and more suited to the industrial economy of the 1920s than the first quarter of the 21st century with the rise of information based multinational entities.

This tax avoidance—including by tech giants Amazon, Facebook, and Google—has resulted in an increasing inability among liberal-democracies to provide public goods to their citizens. On the heels of the further erosion in public finances due to combatting the coronavirus pandemic, the G7 countries have agreed at their recent meeting on an historic joint minimum tax rate on the largest and most profitable multinational corporations. 


The key terminology in the G7 FINANCE MINISTERS & CENTRAL BANK GOVERNORS COMMUNIQUÉ, 5 June 2021, London, United Kingdom concerning the global corporate tax rate is as follows:

16. We strongly support the efforts underway through the G20/OECD Inclusive Framework to address the tax challenges arising from globalisation and the digitalisation of the economy and to adopt a global minimum tax. We commit to reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20% of profit exceeding a 10% margin for the largest and most profitable multinational enterprises. We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies. We also commit to a global minimum tax of at least 15% on a country by country basis. We agree on the importance of progressing agreement in parallel on both Pillars and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.[2] 

At 15%, the rate—to be levied where a company actually sells its goods or services—is considered a first step towards the fair rates necessary to reverse the declining conditions for the global middle and working classes and positively impact the global economy. The tax must next be agreed by the broader G20 nations. Issues among the G7—such as those regarding preexisting digital services taxes on US firms—have already been addressed but further agreement is likely to involve considerable negotiation. The smaller EU nations, for example, argue they must rely on low tax rates to compete for global business and Ireland, currently with a 12.5% corporate tax, has already shown serious resistance to the plan.[3] Other tax haven countries will also see their competitive economic advantage removed by such a low global tax rate which then allows the G7 to come in and secure their revenue streams:

Alex Cobham, chief executive of the U.K.-based NGO Tax Justice Network, said the agreement was “historic” and would make for “the biggest change in tax rules in 100 years.” However, he said, it was also “grossly unfair.” 

“The G7, which is 10% of world’s population, would take 60% of revenues,” Cobham told Fortune.[4]

At the other end of the spectrum, some states and non-governmental organizations (NGOs) argue that a global 15% corporate tax rate is far too low. This initially includes Argentina, Nigeria, and Oxfam who would like to see a greater distribution of wealth from corporate profits into the depleted treasuries of states.[5] However, questions exist as to whether such injects of revenue would actually be spent on public goods and social welfare projects or simply end up in the pockets of autocratic rulers, their families, and retainers.

As the proposed global corporate tax goes to the larger G20 nations for consideration, it is already clear that at least three state factions have formed: the G7 who have promoted the 15% tax, the tax haven countries whose revenue streams are being imperiled, and those countries seeking to gain a larger slice of global corporation revenues. Additionally, the position of powerful authoritarian regimes—such as the Chinese Communist Party (CCP) which imposes a 25% general (and 15% high tech) corporate tax is unknown.[6] What is understood, however, is that the multinational corporations being targeted are not static entities and will dynamically continue to seek to maximize their profits and revenue streams. This will likely result in their seeking to exploit G20 and other state factional blocks to counter the G7 liberal-democratic gambit that seeks to curtail their ongoing extra sovereign corporate tax avoidance schemes and related activities.[7]


“Rich nations ‘millimetre away’ from tech tax deal.” BBC News. 5 June 2021,

“G7: Rich nations back deal to tax multinationals.” BBC News. 5 June 2021,

David J. Lynch, “Biden set for G-7 boost in bid for all nations to impose minimum global corporate tax.” Washington Post. 1 June 2021,

David Milliken and Kate Holton, “Tech giants and tax havens targeted by historic G7 deal.” Reuters. 5 June 2021,

Richard Partington, “G7 deal is as much about balance of power as global tax reform.” The Guardian. 7 June 2021,

Alan Rappeport, “Finance Leaders Reach Global Tax Deal Aimed at Ending Profit Shifting.” New York Times. 5 June 2021,


[1] To access the 53 second Chancellor @RishiSunak video statement posted on Twitter concerning the agreement, go to


[3] Jonathan Keane, “Ireland stands by its iconic 12.5% tax rate as OECD races for reforms.” CNBC. 3 November 2020, and Silva Amaro, “Ireland wants a ‘compromise’ on Biden’s 15% global tax plan.” CNBC. 18 June 2021,

[4] David Meyer and Vivienne Walt, “‘Far too low’: Tax justice campaigners push back against the G7’s 15% minimum tax-rate pact.” Fortune. 7 June 2021,

[5] Ibid; Reuters, “Argentina Says 15% Global Minimum Corporate Tax Rate ‘Too Low.’” US News & World Report. 28 June 2021,; and “Global 15% Minimum Tax Would be Too Low, Countries Say.” Bloomberg Tax. 28 June 2021,

[6] Frank Tang, “Explainer | What is the G7’s global minimum tax, and how could it affect China?” South China Morning Post. 20 June 2021, and Reuters, “China won’t benefit from ‘loopholes’ in global minimum tax plan, US Treasury Secretary Janet Yellen says.” South China Morning Post. 17 June 2021,

[7] The gambit is expected to be a multi-phase strategy in which the 15% tax is first levied, initially breaking the back of the tax haven states. Follow-on components of the strategy would result in the global tax rate being gradually raised to secure more sovereign liberal-democratic revenues. However, as can be seen, many factional potentials exist and it is unknown which actions the multinational corporations will take in response to this strategy.

Further Reading

Robert Kuttner, Can Democracy Survive Global Capitalism? New York: W.W. Norton & Company, 2018.

Dani Rodrik, The Globalization Paradox: Democracy and the Future of the World Economy. New York: W.W. Norton & Company, 2011.

Nicholas Shaxson, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens. New York: St. Martin's Press, 2011.

Gabriel Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens. Chicago: University of Chicago Press, 2015.


About the Author(s)

Pamela Ligouri Bunker is Managing Partner, C/O Futures, LLC, and is a researcher and analyst specializing in international security and terrorism related narratives. She holds undergraduate degrees in anthropology-geography and social sciences from California State Polytechnic University Pomona, an M.A. in public policy from the Claremont Graduate University, and an M.Litt. in terrorism studies from the University of Saint Andrews, Scotland. She is co-editor of Global Criminal and Sovereign Free Economies and the Demise of the Western Democracies: Dark Renaissance (Routledge, 2015) and has published many referred and professional works including additional books.

Dr. Robert J. Bunker is Director of Research and Analysis, C/O Futures, LLC, and an Instructor at the Safe Communities Institute (SCI) at the University of Southern California Sol Price School of Public Policy. He holds university degrees in political science, government, social science, anthropology-geography, behavioral science, and history and has undertaken hundreds of hours of counterterrorism training. Past professional associations include Minerva Chair at the Strategic Studies Institute, U.S. Army War College and Futurist in Residence, Training and Development Division, Behavioral Science Unit, Federal Bureau of Investigation Academy, Quantico. Dr. Bunker has well over 500 publications—including about 40 books as co-author, editor, and co-editor—and can be reached at   


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