Global tax on multinationals: 130 countries signed an agreement to set a minimum rate of 15%

A total of 130 countries reached a landmark tax reform deal on Thursday for multinationals which includes a minimum tax on your profits of “at least 15%”, as announced by the Organization for Economic Co-operation and Development (OECD).

“After years of hard work and negotiations, this historic package of measures ensure that large multinational corporations pay their fair share of taxes around the world “OECD Secretary General Mathias Cormann was quoted in a statement.

A small group of countries, including Ireland and Hungary, very reluctant to sign the draft agreement under negotiation, did not subscribe to the statement, according to the list provided by the organization.

The document, based on the agreement reached at the G7 in early June, also provides for a distribution “more just“Advantages between the countries where companies have their headquarters and those in which they actually operate, even without a physical presence. This part is aimed in particular at digital giants.

The US Secretary of the Treasury, Janet Yellen, celebrated a “historic day for economic diplomacy”, while his German counterpart Olaf Scholz hailed “a colossal step towards greater tax justice”. For the French Minister of the Economy, Bruno Le Maire, this is “the most important international tax agreement concluded in the last century”.

“It is The two-pillar plan will be of great help to countries that need to raise the tax revenues necessary to restore their budgets and public finances., while investing in essential public services, infrastructure and measures necessary for a strong and sustainable recovery from the crisis, ”the OECD said in its statement.

Participants in the negotiations had until October to “Finish the technical work” and prepare “a plan for its effective implementation in 2023”. This should be one of the axes of discussion at the meeting of G20 finance ministers in Venice on July 9 and 10, during which the path to a final agreement could be defined by the end of the year.

The reform aims to put an end to tax competition at a time when states are spending massively to deal with the pandemic, while the IT giants are getting richer. Spurred on by the United States, the G7 meeting in London raised the issue in early June. This agreement of the group of the seven great powers (United Kingdom, France, Italy, Canada, Japan, Germany and the United States) was described as “historic” by the British Minister of Finance, Rishi Sunak, who chaired the meeting.

The 15% rate proposed by the United States was not unanimous and even faces opposition from Republicans in the United States Congress. European Union countries such as Ireland and Hungary, which have made tax competition one of their main attractions, are immediately among the reluctant.

Convincing China, which had also raised “concerns” about the project, was one of the main challenges, in Yellen’s words. The Asian giant applies reduced import rates to companies in certain innovative activities and did not want a minimum rate higher than 15%. With this figure in the final agreement, Beijing decided to join the group of 130 countries.

At the same time, The United Kingdom has proposed to exempt its financial sector from the first column of the reform, which changes the distribution of taxable duties according to the country where the activity has been carried out. Other points remain to be settled on the basis of the future minimum tax or the number of companies included.

US proposal targets top 100 multinationalsInsufficient numbers were reported at the end of May to the G24, a group of emerging countries that includes Argentina, Brazil and India. France also wants to ensure that all the IT giants are included in the reform. It is a “red line” for Paris, insisted Minister Le Maire.

(With information from AFP)

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