In a precedent a global agreement to impose a minimum tax on large companies

Of the 140 countries that participated in the negotiations for the Global Tax Agreement, 136 have supported the agreement but Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined. The Organization for Economic Cooperation and Development, which led the negotiations, said the deal would cover 90% of the global economy and would allow countries to raise about $150 billion in new revenue annually.

The Organization for Economic Co-operation and Development has announced a global agreement to ensure that major companies pay a minimum tax of 15%, preventing them from avoiding paying. The organization added that 136 countries agreed to this agreement, and US President Joe Biden described the agreement as a basis for equal opportunities.

The unprecedented global agreement aims to end a four-decade-old race between governments that sought to attract investments and create jobs, by severely reducing taxes for multinational companies, allowing these companies to choose the lowest tax rates available.

Negotiations to conclude this agreement have been underway for 4 years, but turned to take place online during the pandemic, and in recent months these negotiations have enjoyed the support of the US President.

Equal opportunity

“For the first time in history, we are establishing a strong global minimum tax that will eventually level the playing field for American workers, taxpayers, and the rest of the world,” the US President said in a statement on Friday. My tax rewarded multinational corporations for moving jobs and profits abroad.”

US President Joe Biden said, "For the first time in history, we are establishing a strong global minimum tax that will eventually level the playing field for American workers, taxpayers, and the rest of the world."

The deal aims to prevent large corporations from making profits in low-tax countries such as Ireland, no matter where their customer base is located, a problem that has become bigger and more pressing with the emergence of tech giants that can easily do business across borders such as Google, Facebook and Amazon.

Of the 140 countries participating in the negotiations, 136 have supported the agreement, but Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined. The Organization for Economic Cooperation and Development, which led the negotiations, said the deal would cover 90% of the global economy and would allow countries to raise about $150 billion in new revenue annually.

“Today we have taken another important step in the path of tax justice,” German Finance Minister Olaf Scholz said in a statement emailed to Reuters. British Finance Minister Rishi Sunak also praised the agreement, saying, “We now have a clear path to a more fair tax system, where players pay The world's adults get their fair share wherever they work."

French Finance Minister Bruno Le Maire said the agreement would ensure that digital giants would pay a fair share of taxes in the countries where they earn income. US Treasury Secretary Janet Yellen described reaching the agreement as "a once-in-a-generation achievement of economic diplomacy."

Switzerland is worried

Before the ink of the agreement dried, some countries expressed concern about its implementation, as the Swiss Ministry of Finance demanded in a statement that the interests of small economies be taken into account, and said that the date of implementing the agreement in 2023 is not possible.

"Facebook has long advocated reform of global tax rules, and we know this can mean (for us) paying more taxes, in different places," Nick Clegg, Facebook's vice president of global affairs, said in a statement. "The tax system needs to gain public confidence while bringing stability to companies. We are happy to see international consensus," he said.

Alphabet Google also welcomed the global tax agreement, saying it is an important step forward, and expressed its hope that this momentum will continue. An Amazon spokesperson expressed the company's support for the progress that has been made towards a globally agreed solution that ensures the harmonization of the global tax system.

It is expected that the leaders of the Group of 20 countries will sign the agreement at their summit in the Italian capital, Rome, at the end of this month, but the matter will not stop there, as the parliaments of each signatory country will have to pass the agreement in order for it to become effective.