At the end of a two-day meeting in London, the bloc said that they had committed to a global minimum tax of a least 15 per cent on a "country by the country basis" that would help the government recover from the impact of the COVID-19 pandemic.

"We also commit to a global minimum tax of at least 15 per cent 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," the G7 statement read.

UK Finance Minister Rishi Sunak termed this decision as a "historic agreement" to reform the global tax system in a bid to make it fit for the global digital age.

"I am delighted to announce that G-7 finance ministers today, after years of discussions, have reached a historic agreement to reform the global tax system to make it fit for the global digital age and crucially to make sure that it is fair, so that the right companies pay the right tax in the right places,'' Sunak said in a video message posted on Twitter.

In the statement, G7 also extended support to the efforts 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 per cent 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," the G7 said.

The bloc is made of Canada, France, Germany, Italy, Japan, UK, and the US.