“Taxes?” shrieked Verum, “Are you telling me today’s news is about taxes?”
Today, Verum had woken up with a smile on her face. The scent of monsoon was in the air. Verum couldn’t wait to dance in the rain. And maybe, today would be the day to do that! “Woohoo!” she thought to herself.
But then Verum’s crystal ball began spinning, and it popped out the word – taxes!
“Why are you going on and on about taxes?” said Scorch, “Is someone trying to make you pay them? Just say no! You’re too young to pay taxes, Verum.”
At this, a small laugh escaped Verum. She said, “No, nobody is asking me to pay taxes. The Group of Seven nations or G7 Nations as they are commonly called has reached a historic global tax deal. I just got the news. The seven nations are Britain, Canada, France, Germany, Italy, Japan, and the United States.”
“But what are taxes?” said Felix.
“Well, a government supports itself with some amount of money that it collects from its citizens. These amounts are called taxes. The government collects them through various means. We pay taxes when we buy something, say a packet of biscuits. And some taxes are collected as a proportion of people’s incomes. There is a fixed amount for different salary slabs. The government uses this money to fund facilities for the people such as healthcare, education, infrastructure building, and so on,” explained Scorch.
“And just like individuals pay taxes, so do companies. However, some companies move their operations to those countries where the tax rates are low. And they end up paying lower taxes,” added Verum.
“So, seven of the world’s most advanced economies got together to tackle this problem,” Orak inquired.
“According to this new deal, large multinational companies will have to pay at least 15% taxes regardless of where they are located. These companies will be taxed on the basis of where they sell their products.”
“Now that’s an interesting development,” said Orak.
“Yes. After the G7 countries, this deal will be proposed to the bigger Group of 20 nations. If they agree to sign it, then slowly this deal will be applicable all over the world,” said Verum.