OECD: Agreement on minimum tax for large corporations

Breakthrough in the negotiations on a global minimum tax for large corporations: According to the Organization for Economic Cooperation and Development, 130 countries agreed on a tax rate of at least 15 percent.

130 countries have agreed on a comprehensive tax reform. This includes a global minimum tax of 15 percent for large corporations, it said on Thursday in a joint statement by the states. They had been negotiating this for years under the umbrella of the industrialized nations organization OECD. Some details that are still open should be clarified by October.

During a visit to Washington, Federal Finance Minister Olaf Scholz spoke of “colossal progress” in the area of ​​international corporate taxation. “The thing is now on the track.” It is the biggest breakthrough on the international stage in the past 20 years. For Germany, the agreement will ultimately mean more tax revenue.

Scholz said that with the agreement, states would “not always have to keep one eye on the fact that there are tax havens and tax evaders elsewhere”. The 130 countries represented more than 90 percent of the world’s national product. “So this is an actual, really massive change that we will see for the next few years and decades.” The tax race to the bottom is over. He wanted to “arrest” the agreement in Washington.

Yellen: “Historic Day” for Economic Diplomacy

Scholz will meet US Treasury Secretary Janet Yellen on Friday. Yellen spoke with a view to agreeing a “historic day” for economic diplomacy. So far, countries have undercut each other in dealing with the corporations.

“No country won this race,” said Yellen. “Lower tax rates have not only failed to attract new business, they have also deprived countries of funding for critical investments in infrastructure, education and fighting the pandemic.” At the beginning of April, Yellen spoke out in favor of a global minimum tax, thus giving new tailwind to efforts with the power of the world’s largest economy.

Adaptation to the digital age

The seven leading industrialized countries (G7) had recently agreed on a basic framework – with a minimum tax of 15 percent for globally active companies and a new distribution of the tax revenues of the 100 largest and most profitable corporations in favor of countries in which these companies do a lot of business . Large emerging markets in particular should benefit from this.

With the planned reform, the tax rules are to be adapted to the digital age. For decades, global corporations have been cleverly transferring profits to countries that are attracting them with ever lower tax rates – and in the end they pay comparatively little taxes, usually significantly less than medium-sized companies, for example. Technology companies in particular shift profits from patents, software or license revenues that are based on intellectual property particularly frequently.