130 countries support a global tax reform

Authorities representing 130 nations reportedly agreed to reform the global tax system so that large corporations “pay a fair share” everywhere they operate.

The taxation of large IT companies has been a subject of contention between the US and other countries.

The ideas, according to the Organisation for Economic Co-operation and Development (OECD), may raise roughly $150 billion (£109 billion) in annual tax revenues.

The OECD said on Thursday that negotiators had reached an agreement on a minimum corporate tax rate of at least 15%.

It would be a historic day for economic diplomacy, according to US Treasury Secretary Janet Yellen.

The Paris-based organization admitted, however, that Ireland and Hungary, both of which have low corporate taxes, had not joined the global minimum wage pact.

The accord was backed by all G20 countries, including the United States, the United Kingdom, China, and France.

Participating nations have been anticipated to strive to implement relevant legislation to put in the bare minimum, but details such as possible exclusions for specific industries are already being worked out.

According to a statement made by 130 of the 139 countries and jurisdictions that participated in the negotiations, a detailed action plan, as well as unresolved issues, will be resolved by October 2021.

Countries, on the other hand, have agreed to new taxes policies for the world’s most powerful firms. They argue that tax advantages on profits above $100 billion should be moved to nations where revenues are generated rather than to countries where a company’s headquarters are situated.

The agreement, according to US Treasury Secretary Janet Yellen, signals the end of a “race to the lowest” on tax rates. For decades, the United States has engaged in a self-defeating international tax race, decreasing its corporate tax rates only to see other countries follow suit. According to her, the race had been won by “no nation.”

Indeed, the Biden administration has pushed for a worldwide accord while still preparing to raise taxes at home. For example, it has called for an increase in the corporate tax rate in the United States from 21% to 28%.

Source: BBC News