The world’s developed nations plan to impose a minimum 15-percent global minimum corporate tax rate under a “historic” new agreement meant to prevent businesses from moving their profits to low-tax countries.
The Organization for Economic Cooperation and Development (OECD), whose members represent more than 90 percent of the global gross domestic product, announced the agreement in a statement issued Friday in Paris after years of negotiations.
The “two-pillar solution” will be delivered to the Group of 20 (G20) Finance Ministers meeting in Washington on Wednesday, then to the G20 Leaders Summit in Rome at the end of the month.
For it to be implemented, however, the deal will need to be approved by the legislatures of all 136 countries participating in the agreement – a process its backers hope will be completed by 2023.
“Today’s agreement will make our international tax arrangements fairer and work better,” OECD Secretary-General Mathias Cormann said in a written statement. “This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalized and globalized world economy.
“We must now work swiftly and diligently to ensure the effective implementation of this major reform.”
“Today’s agreement represents a once-in-a-generation accomplishment for economic diplomacy,” added U.S. Treasury Secretary Janet Yellen. “We’ve turned tireless negotiations into decades of increased prosperity – for both America and the world.”
The deal was announced only days after the “Pandora Papers” leak focused attention on how tax havens – including in the United States – have allowed the world’s rich and well-connected to hide vast fortunes from the scrutiny of government revenue collectors.