The Group of Seven Wealthy Nations has struck a landmark deal that could help countries collect more taxes from big business and allow governments to impose taxes on U.S. tech giants like Amazon.com Inc. and Facebook Inc.

G-7 finance ministers’ agreement in London responds to US demand for a minimum corporate tax rate of “at least 15%” on foreign income, paves the way for levies on multinationals in countries where they earn money, instead of just where they are headquartered.

The agreement aims to modernize the century-old international tax code and calm the transatlantic tensions that threatened to degenerate into a trade war under Donald Trump. But key details have yet to be clarified, more countries have to sign, and full implementation could take years.

U.S. Treasury Secretary Janet Yellen, among CFOs who hailed the announcement as an unprecedented step, said a final deal on which companies could see their profits taxed outside their home countries would include Amazon and Facebook.

“What you are seeing is a renewal of multilateralism, a willingness of the ruling G-7 and G-20 nations to cooperate to tackle the most critical challenges facing global economies,” Yellen told the outcome of the meeting.

Attention will now turn to a July meeting of the Group of 20 finance ministers in Italy and long-standing discussions between around 140 countries in the Organization for Economic Co-operation and Development.

The G-7 pact marks a step in rewriting a global system that critics say has saved large corporations billions of dollars in tax bills by switching jurisdictions. It also helps respond to complaints that large digital companies can make money in multiple countries and pay taxes only at home.

In response to the announcement, some of the world’s biggest tech companies have focused on how the deal could help clarify the rules about where to pay taxes.

“Today’s deal is an important first step towards providing certainty for businesses and building public confidence in the global tax system,” Facebook vice president of global affairs Nick said on Twitter. Clegg.

An Amazon spokesperson said the OECD-led process “will help stabilize the international tax system” and described Saturday’s deal as “a welcome step forward in efforts to achieve this goal.”

Under the Trump administration, the United States also refused to allow foreign governments to tax American digital businesses, a key European request.

The transatlantic divide has turned into a battle of unilateral action and threats of trade sanctions, which, although suspended, are still in place.

According to the statement released after the London meeting, countries where large companies operate would be granted the right to tax “at least 20%” of profits exceeding a 10% margin. This would apply to “the biggest and most profitable multinational companies,” potentially allowing the G-7 to square the circle so that digital is included without being targeted.

When asked if that meant companies like Facebook and Amazon would be included, Yellen said they would be eligible “by almost any definition” and “most of those companies are likely to be included in this new one. program”.

The British and French ministers both said they were now assured tech giants would be in the sights of the new rules, although the final quantitative criteria are yet to be determined.

“We have been fighting for four years in all European and international fora, here at the G-7 and the G-20 for a fair taxation of the digital giants and for a minimum tax on companies”, declared the French Minister of Finance Bruno Le Maire.

The antipathy in recent years was greatest between Paris and Washington. France was the first country to bypass the OECD’s slow process of how to tax profits, opting for a controversial levy exclusively on the digital incomes of large companies.

The G-7 said countries would “coordinate appropriately” to remove these taxes on digital services. Solving the exact sequence of this could prove tricky, with countries unwilling to forgo their income until they are sure what they will gain from the new global rules.

Italian Finance Minister Daniele Franco has said he will aim to broaden the discussion at the July G-20 finance ministers meeting in Venice. Once the proposal is accepted, Italy will no longer need its digital tax, he said.

Japan’s Finance Minister Taro Aso said the U.S. change in leadership this year paved the way for a deal and criticism of the big profits being made by tech companies has also prompted the group to take action. .

Two problems

Highlighting other remaining divisions, the Irish Finance Minister, whose country has lured some of the world’s big companies with low taxes, said any agreement on a minimum rate must meet the needs of “small and large countries, developed and in development”.

Pushing in the other direction, Le Maire said the 15% is a starting point and France will fight for a higher rate in the weeks to come.

President Joe Biden’s administration still needs US congressional approval and is hoping the deal will give it leverage over its massive infrastructure program. He is seeking the support of lawmakers to increase the tax rate for domestic corporations from 21% to 28%. A 15% international deal could help it because it offers options to multinationals.

Two leading Republican lawmakers said the deal “appears premature given the many unanswered questions about the Pillar 1 and Pillar 2 proposals and their potential effect on US businesses and US revenues.”

“We continue to warn of any developments that could harm American businesses,” said Mike Crapo, ranking member of the Senate Finance Committee, and Kevin Brady, House Ways and Means ranking member, said in a statement.

The OECD has said a final global deal may not arrive until October, with delivery forcing countries to pass the plan through national legislatures.

“There is still important work to be done,” said OECD Secretary General Mathias Cormann. “But this decision adds important momentum to the discussions to come.”