136 Countries Agree To Minimum Corporate Tax Rate

A group of 136 countries have agreed to a global treaty that would tax large multinationals at a minimum rate of 15% and require companies to pay taxes in the countries where they do business. CNN reports: Estonia, Hungary and -- most notably -- Ireland joined the agreement Thursday. It is now supported by all nations in the Organization for Economic Cooperation and Development and the G20. The countries that signed on to the international treaty represent more than 90% of global GDP. Four countries that participated in the talks -- Kenya, Nigeria, Pakistan and Sri Lanka -- have not yet joined the agreement. The Biden administration breathed new life into the global initiative earlier this year and secured the support of the G7 countries in June, paving the way for a preliminary deal in July. Ireland, which had declined to join the initial agreement in July, has a corporate tax rate of 12.5% -- a major factor in persuading companies such as Facebook, Apple and Google to locate their European headquarters in the country. Ireland signed up after the preliminary agreement was revised to remove a stipulation that rates should be set at a minimum of "at least 15%." The new rate would apply to 1,556 multinationals based in Ireland, employing about 400,000 people. More than 160,000 businesses making less than $867 million in annual revenue and employing about 1.8 million people would still be taxed at 12.5%. Alongside a minimum corporate tax rate, the pact includes provisions to ensure that multinational companies pay tax where they generate sales and profits, and not just where they have a physical presence. That could have major ramifications for tech companies such as Google and Amazon, which have amassed vast profits in countries where they pay relatively little tax. The OECD expects implementation of the agreement to begin in 2023. But even with Ireland and other previous holdouts now on board, the deal still requires countries to pass domestic legislation.Read more of this story at Slashdot.
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