[ad_1]
PARIS (Reuters) – A group of 136 countries on Friday set a minimum global tax rate of 15% for large businesses and sought to make it harder for them to evade tax in a landmark deal which, according to US President Joe Biden has leveled the playing field.
The deal aims to end four decades of “race to the bottom” by setting a floor for countries that have sought to attract investment and jobs by taxing multinational companies lightly, allowing them to seek lower rates. low taxation.
Of the 140 countries involved, 136 supported the deal, while Pakistan, Kenya, Nigeria and Sri Lanka abstained.
While Kenya, Nigeria and Sri Lanka did not back a previous version of the deal, Pakistan’s abstention came as a surprise, an official briefed on the talks said. India also had qualms until the last minute, but ultimately backed the deal, they added.
Negotiations have been going on for four years and while the costs of the coronavirus pandemic have given them added momentum in recent months, the deal was only reached when Ireland, Estonia and Hungary dropped their opposition and signed up.
In addition, the agreed 15 percent floor is much lower than the corporate tax rate, which averages around 23.5 percent in industrialized countries.
“The establishment, for the first time in history, of a strong global minimum tax will finally be a level playing field for American workers and taxpayers, as well as the rest of the world,” Biden said in a statement.
The deal aims to prevent large companies from making profits in low-tax countries like Ireland regardless of where their customers are, an issue that has become increasingly urgent with growth. “Big Tech” giants who can easily do business across borders.
The Paris-based Organization for Economic Co-operation and Development (OECD), which is leading the talks, said the deal would cover 90 percent of the global economy.
“We have taken another important step towards more tax justice,” German Finance Minister Olaf Scholz said in a statement.
“We now have a clear path to a fairer tax system, where the world’s big players pay their fair share wherever they do business,” said his British counterpart Rishi Sunak.
Some countries worried But with the ink barely dry, some countries were already worried about the implementation of the agreement.
The Swiss finance ministry said in a statement that the interests of small economies should be taken into account and the implementation date of 2023 was not possible, while Poland, which worries about the impact on investors foreigners said she would continue to work on the deal.
“Increased prosperity”
Central to the deal is a minimum corporate tax rate of 15 percent and allows governments to tax a larger share of the profits of foreign multinationals.
US Treasury Secretary Janet Yellen hailed it as a victory for American families as well as international businesses.
“We turned tireless negotiations into decades of increased prosperity for America and the world. Today’s agreement represents a unique achievement for economic diplomacy, ”Yellen said in a statement.
The OECD said the minimum rate would allow countries to collect around $ 150 billion in new income per year, while taxing rights on more than $ 125 billion in profits would shift to countries where large multinationals earn. their income.
Posted in Dawn, October 9, 2021
[ad_2]
Source link