G7 finance ministers have agreed on reforms that will see multinational tech giants pay their ‘fair share of tax’ in the countries they operate in.

At a meeting in London, the group of nations decided on a global minimum rate that ensures multinationals at least 15 per cent tax in each country they do business in.

During the two days of talks, chaired by chancellor Rishi Sunak, finance leaders set new principles to tackle the tax challenges brought about by an increasingly globalised and digital global economy.

The G7 agreed that largest and most profitable international companies will have to pay tax wherever they operate, not just where they have their headquarters.

The rules apply to global firms with at least a 10 per cent profit margin and would see 20 per cent of any profit above this margin reallocated and then subjected to tax in the countries they operate.

Nationals also agreed to follow the UK in making climate reporting mandatory and take concrete steps to crack down on environmental criminals.

“These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer - creating a fairer tax system fit for the 21st century,” said Rishi Sunak, UK finance minister. “This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”

According to a report by Reuters, shares in Facebook, Amazon, Apple, Microsoft, and Alphabet were all down slightly following the announcement of the new corporate tax deal.

But Google praised the new tax saying it "strongly supports" the work being done to update international tax rules.

"We hope countries continue to work together to ensure a balanced and durable agreement will be finalised soon," Google spokesman José Castañeda said in a statement.

Facebook’s vice-president of global affairs Nick Clegg welcomed the news in a tweet, suggesting that the social media giant had “long called for reform of the global tax rules."

"Today's agreement is a significant first step towards certainty for businesses and strengthening public confidence in the global tax system,” he added.

Labour's shadow chancellor Rachel Reeves, said that although it was "encouraging to see the first moves towards a global pact on tax avoidance," the government has spent the last few weeks "watering down" what was initially intended to be a 21 per cent rate of global minimum corporate tax.

“That would have brought £131 million extra a week to Britain for our NHS and other public services, while also stopping our high streets being aggressively undercut,” she said.

The government said that the new agreement will now be discussed in further detail at the G20 Financial Ministers & Central Bank Governors meeting in July.

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