- The majority of countries negotiating a worldwide overhaul of cross-border taxation have backed plans to introduce new global tax rules
- A global minimum corporate tax of at least 15 per cent could generate US$150 billion (A$200.97 billion) in additional global tax revenues each year
- The new tax rate would apply to companies with turnover above a 750-million-euro (A$1.19 billion) threshold, with only the shipping industry exempted
- Only nine countries did not sign on: Ireland, Estonia, Hungary, Peru, Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya
- The plan will now go to the Group of Twenty for endorsement at a meeting in Venice next week
The majority of countries negotiating a worldwide overhaul of cross-border taxation have backed plans to introduce new rules for multinational companies.
The Paris-based Organisation for Economic Cooperation and Development, which hosted the two days of discussions, said on Thursday that a global minimum corporate income tax of at least 15 per cent could generate roughly US$150 billion (A$200.97 billion) in additional global tax revenues each year.
It added that 130 countries — representing more than 90 per cent of global GDP — had shown support for the agreement.
“With a global minimum tax in place, multinational corporations will no longer be able to pit countries against one another in a bid to push tax rates down,” US President Joe Biden said in a statement.
“They will no longer be able to avoid paying their fair share by hiding profits generated in the United States, or any other country, in lower-tax jurisdictions.”
The new minimum tax rate would apply to companies with turnover above a 750-million-euro (A$1.19 billion) threshold, with only the shipping industry exempted.
In June, the Group of Seven advanced economies agreed to the minimum tax rate plan, which will now go to the Group of Twenty for endorsement at a meeting in Venice next week. Technical details are to then be agreed by October so the new rules can be implemented by 2023.
Only nine countries did not sign on: Ireland, Estonia, Hungary, Peru, Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya.
But those holdouts risk becoming isolated, particularly since all major economies — including noted tax havens like Bermuda, the Cayman Islands and the British Virgin Islands — have offered their support.
Irish Finance Minister Paschal Donohoe, whose country has attracted many big US tech firms with its 12.5 per cent corporate tax rate, said he was “not in a position to join the consensus,” but would still try to find an outcome he could support.