Advertisement

Global tax deal obtains support of 130 countries

Paris—A total of 130 countries have agreed a global tax reform ensuring that multinationals pay their fair share wherever they operate, the OECD said on Thursday, but some EU states refused to sign up.

The Organization for Economic Co-operation and Development said in a statement that global companies, including US behemoths Google, Amazon, Facebook, and Apple would be taxed at a rate of at least 15 percent once the deal is implemented.

The new tax regime will add some $150 billion to government coffers globally once it comes into force, which the OECD said it hoped would be in 2023.

“The framework updates key elements of the century-old international tax system, which is no longer fit for purpose in a globalized and digitalized 21st century economy,” the OECD said.  

The formal agreement follows an endorsement by the G7 group of wealthy nations last month, and negotiations now move to a meeting of the G20 group of developed and emerging economies on July 9-10 in Venice, Italy.

US President Joe Biden said the latest deal “puts us in striking distance of full global agreement to halt the race to the bottom for corporate taxes.”

Germany, another backer of the tax reform, hailed it as a “colossal step towards tax justice,” and France said it was “the most important tax agreement in a century.”

British finance minister Rishi Sunak, whose country holds the G7 presidency, said “the fact that 130 countries across the world, including all of the G20, are now on board, marks a further step in our mission to reform global tax.”

But EU low-tax countries Ireland and Hungary declined to sign up to the agreement reached in the OECD framework, the organization said, highlighting lingering divisions on global taxation.

Both countries are part of a group of EU nations also including Luxembourg and Poland that have relied on low tax rates to attract multinationals and build their economies.

Ireland, the EU home to tech giants Facebook, Google and Apple, has a corporate tax rate of just 12.5 percent.

Irish Finance Minister Paschal Donohoe has warned that the new rules could see Ireland lose 20 percent of its corporate revenue.

On Thursday, Donohoe said Ireland still “broadly supports” the deal, but not the 15-percent tax floor.

“There is much to finalize before a comprehensive agreement is reached,” he said, adding that Ireland would “constructively engage” in further discussions. 

Also expressing concerns is Switzerland—known for its banking secrecy laws—which said it would support the measures despite “major reservations” and that it hoped the interests of “small, innovative countries” be taken into account.

An agreement for the implementation of the plan is planned for October. 

Topics: Organization for Economic Co-operation and Development , Joe Biden , Paschal Donohoe
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Congress Trivia 1
Advertisement