World’s leading economies agree global minimum corporate tax rate
The world’s leading economies have signed up to a plan to force multinational companies to pay a global minimum corporate tax rate of at least 15 per cent following intense negotiations in Paris at the OECD.
The historic agreement among 130 countries will ensure the largest companies, including Big Tech, pay at least $100bn a year more in taxes, with more of that money going to the countries where they do most of their business.
The OECD said the rules should be put in place next year and implemented in 2023.
Only nine of the 139 countries involved in the talks refused to sign up, including Ireland, Estonia and Hungary. All of the G20 leading nations backed the plan following lobbying by the US.
Mathias Cormann, the new OECD secretary-general, hailed the agreement, saying it would ensure, “large multinational companies pay their fair share of tax everywhere”.
But after multiple carve-outs were agreed to ensure that countries could still use low taxes to encourage investment, he stressed that the rules were not designed to impose the same corporate tax regime everywhere.
“This package does not eliminate tax competition . . . but it does set multilaterally agreed limitations on it,” he said. “It also accommodates the various interests across the negotiating table, including those of small economies and developing jurisdictions.”
US president Joe Biden said: “With a global minimum tax in place, multinational corporations will no longer be able to pit countries against one another in a bid to push tax rates down and protect their profits at the expense of public revenue.”
But in a sign of potentially difficult battles ahead in Congress, Kevin Brady, the top Republican on the House of Representatives’ ways and means committee, said the deal was “a dangerous economic surrender that sends US jobs overseas”.
Olaf Scholz, the German finance minister, hailed the deal, calling it a “colossal step forward towards more tax justice”, while Rishi Sunak, the UK chancellor, stressed that it would ensure “multinational tech giants pay the right tax in the right countries”.
The carve-outs and exemptions were not enough to satisfy the eight countries that objected to the framework, including Ireland, Estonia and Hungary, which are OECD members.
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