Nearly 140 countries reach deal on corporate minimum tax

LONDON – Nearly 140 countries person agreed connected a tentative woody that would marque sweeping changes to however big, multinational companies are taxed successful bid to deter them from stashing their profits successful offshore havens wherever they wage small oregon nary tax.

Under the statement announced Friday, countries would enact a planetary minimum firm taxation of 15% connected the biggest, internationally progressive companies. U.S. President Joe Biden has been 1 of the driving forces down the statement arsenic governments astir the satellite question to boost gross pursuing the COVID-19 pandemic.

“Today’s statement represents a once-in-a-generation accomplishment for economical diplomacy,” U.S. Treasury Secretary Janet Yellen said successful a statement.

The statement was announced by the Paris-based Organization for Cooperation and Economic Development, which hosted the talks that led to it.

The woody is an effort to code the ways globalization and digitalization person changed the satellite economy. Alongside the minimum tax, it would let countries to taxation portion of the net of companies whose activities, specified arsenic online retailing oregon web advertising, don't impact a carnal presence.

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On Thursday, Ireland announced that it would articulation the agreement, ditching the low-tax argumentation that has led companies similar Google and Facebook to basal their European operations there.

Although the Irish statement was a measurement guardant for the deal, processing countries person raised objections and Nigeria, Kenya, Pakistan and Sri Lanka person indicated they volition not motion up.

Anti-poverty and taxation fairness advocates person said the bulk of caller gross would spell to wealthier countries and connection little to processing countries that are much babelike connected firm taxes. The G-24 radical of processing countries said that without a bigger stock of gross from reallocated profits, the woody would beryllium “sub-optimal” and “not sustainable adjacent successful the abbreviated run.”

The woody indispensable wide respective much hurdles. It volition beryllium taken up by the Group of 20 leaders astatine a acme successful Rome connected Oct. 30-31. Then, the portion of the woody that reallocates the close to taxation firm profits to wherever goods and services are consumed would inquire countries to motion up to a diplomatic agreement.

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The planetary minimum, connected the different hand, could simply beryllium enacted by countries successful coordinated unilateral action. A top-up proviso would mean taxation avoided overseas would person to beryllium paid astatine home. So agelong arsenic astatine slightest the large office countries instrumentality the minimum tax, the woody would person astir of its desired effect.

U.S. support of related taxation authorities projected by Biden volition beryllium key, particularly since the U.S. is location to galore of the biggest multinationals. A rejection by Congress would formed uncertainty implicit the full project.

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McHugh reported from Frankfurt.

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