Nearly 140 countries have reached an agreement on a tentative agreement that will comprehensively reform the taxation of large multinational companies and prevent them from hiding profits in offshore safe havens, where they only need to pay very little The tax may not be paid.
According to the agreement announced on Friday, countries will impose a 15% global minimum corporate tax on large multinational companies. Once implemented, it is estimated that it will bring in $150 billion in revenue for the coffers of governments.
The United States has been one of the promoters behind this agreement, as governments around the world seek to increase revenue after the pandemic.
US Secretary of the Treasury Janet Yellen said in a statement: "Today's agreement represents the achievement of economic diplomacy." She said that this will end the competition between countries with low tax rates.
She said: “The United States is not relying on the ability to provide low corporate tax rates to compete, but on the skills and innovation of workers to compete. This is a game we can win.”
The Paris Organization for Economic Cooperation and Development announced that the organization hosted the talks on the agreement.
OECD Secretary-General Matthias Koman said: "Today's agreement will make our international tax arrangements fairer and work better. This is a major victory for multilateralism."
There are several obstacles before it goes into effect. Approval of relevant tax legislation in the United States will be the key, because the United States is home to many of the largest multinational companies. The veto of Congress will bring uncertainty to the entire plan.
This agreement attempts to solve the new problems that globalization and digitization have brought to the world economy. In addition to the minimum tax rate, the agreement will allow countries to levy taxes on some virtual revenues (such as online retail or online advertising).
On Thursday, Ireland announced that it would join the agreement. Previously, companies such as , Google , and Facebook had set up their European business headquarters in Ireland because of the country’s low tax policy.
Facebook stated that it is "very happy to see the international consensus that is being formed."
Facebook’s vice president of global affairs Nick Clegg said that the company “has been calling for global tax rule reforms for a long time, although we recognize that this may mean paying more taxes.”
Ireland joined the agreement It is an improvement, but developing countries have already raised objections, and Nigeria, Kenya, Pakistan and Sri Lanka have indicated that they will not sign the agreement.
Those who oppose the agreement believe that most of the income generated by the agreement will go to richer countries and will bring less benefit to developing countries that rely more on corporate taxes.
The agreement will be discussed by the finance ministers of the G20 next week, and then finally approved by the leaders of the G20 at the Rome summit at the end of October.
Countries will sign a diplomatic agreement to levy taxes on companies that do not actually exist in a country but make profits (such as through digital services).
The second part of the agreement, which is to maintain a global minimum tax rate of at least 15%, will be separately formulated by each country in accordance with the model rules established by the OECD.
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