The Organization for Economic Co-operation and Development (OECD) said in a statement that nearly 130 countries have signed on to a two-pillar initiative to alter international taxation regulations by supporting a global minimum tax structure. Multinational corporations will likewise pay a fair share of tax wherever they operate under the new laws.
Global companies, including US tech giants Google, Amazon, Facebook, and Apple would be taxed at a rate of at least 15 percent estimated to generate around $150 billion in additional global tax revenues annually once the deal is implemented.
“After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere,” OECD Secretary-General Mr. Mathias Cormann said.
The two-pillar package intends to ensure that huge worldwide corporations pay taxes where they operate and earn profits, while also providing the international tax system with much-needed clarity and stability.
The first pillar is to create a more equitable allocation of income and taxes rights among countries in the case of the largest businesses, particularly digital companies. The second pillar aims to fair competition in terms of corporate income tax competition by establishing a global minimum corporate tax rate that countries might utilize to safeguard their tax bases.
The formal agreement comes after the G7 group of wealthy nations endorsed it at a summit in the United Kingdom last month. The discussions will now continue to Venice, Italy, for a meeting of the G20 group of established and emerging economies in July.
“It is in everyone’s interest that we secure a final agreement among all Inclusive Framework members as planned later this year,” Mr. Cormann said.
The new agreement will be implemented in 2023, according to the members. The new framework modernizes major aspects of the international tax system, which has been in place for almost a century.
Related: G7 countries near decision to levy corporate tax from multinationals
