The Organization for Economic Cooperation and Development (OECD) announced on July 1 that 130 countries have agreed to plans for a global minimum corporate tax rate.
In a statement, OECD said that the 130 countries, which represent over 90% of the global gross domestic product, have committed to a two-pillar plan to reshape the global tax system, which includes a global minimum corporate income tax of at least 15% that could generate around $150 billion in additional global tax revenues annually.
OECD also said that taxing rights on over $100 billion were expected to be reallocated market jurisdictions annually.
OECD Secretary-General Mathias Cormann described the plan as “historic” and said that it will “ensure that large multinational companies pay their fair share of tax everywhere.”
“This package does not eliminate tax competition, as it should not, but it does set multilaterally agreed limitations on it. It also accommodates the various interests across the negotiating table, including those of small economies and developing jurisdictions,” Cormann stated.
“With a global minimum tax in place, multinational corporations will no longer be able to pit countries against one another in a bid to push tax rates down and protect their profits at the expense of public revenue,” United States President Joe Biden said in a statement.
According to OECD, finalizing the remaining technical details of the plan is due on October this year.
Some countries who did not sign the global tax reform at this time include Ireland, Estonia, and Hungary — European Union members who have tax rates below 15%.
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