ISLAMABAD: About 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 new tax regime will enable 130 countries to receive more or less $150 billion more in taxes from the multi-national companies (MNCs).
The Organisation 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 framework updates key elements of the century-old international tax system, which is no longer fit for purpose in a globalised and digitalised 21st century economy,” the OECD said.
The formal agreement follows an endorsement by the G7 group of wealthy nations last month at a meeting in Britain. The 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.” US Treasury Secretary Janet Yellet called it “historic”.
Germany, another backer of the tax reform, hailed it has 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 European Union low-tax countries Ireland and Hungary declined to sign up to the agreement reached in the OECD framework, the organisation 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, if achieved, could see Ireland lose 20 percent of its corporate revenue.
Nine of the 139 participants in the talks have so far not signed on to the agreement. But China, whose position was being closely watched as it offers tax incentives to key sectors, endorsed the agreement.