As of: October 8th, 2021 9:12 pm
In the end, almost all OECD members are there: 136 countries have agreed on a global tax reform. From 2023, international corporations are expected to pay at least 15 percent tax. Ireland, too, had finally given up its resistance.
The members of the Organization for Economic Co-operation and Development (OECD) have agreed on a global reform of corporate taxation. According to the OECD, internationally active companies should pay at least 15 percent tax regardless of their location. The regulation should take effect from 2023.
If a company with its subsidiary pays less taxes abroad, the home country can also collect the difference. This is to prevent profits from being shifted to tax havens. In addition, large companies should no longer only be taxed in their mother country, but also where they do good business.
Of the 140 OECD members, only Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined. The previous low-tax country Ireland, on the other hand, had given in.
Expected additional income of 150 billion dollars
The cabinet in Dublin decided on Thursday evening to increase the tax rate for companies with a turnover of more than 750 million euros from 12.5 to 15 percent. Ireland, where large digital corporations have their European headquarters, thus avoids further dispute with the G20 group of the major economic powers.
The OECD expects the minimum tax alone to generate 150 billion dollars (around 130 billion euros) of additional tax revenue worldwide. Almost all OECD countries had already given their approval at working level, including well-known tax havens such as the Cayman Islands. The G20 countries had already agreed on the reform in the summer.
Scholz: “An important step for more tax justice”
“Today we have taken another important step towards more fair taxation,” said Federal Finance Minister Olaf Scholz. His French colleague Bruno Le Maire spoke of an essential agreement for the economies of the countries. “This deal opens the way for a tax revolution.”
The EU Commission President Ursula von der Leyen also spoke of an important step “to make our global tax system fairer”.
US President Joe Biden also attributed the deal to “American leadership and diplomacy”. “For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for moving jobs and profits overseas,” Biden said. This race would have put American workers at a competitive disadvantage as well as many other countries.