Reaching a global agreement to squeeze tax havens

On October 8, a group of 136 countries agreed to impose a global minimum tax of 15%, making it impossible for multinational corporations to move money around to avoid paying taxes. US President Joe Biden called this a landmark agreement, which will level the playing field.

Reaching a global agreement to squeeze tax havens
Reaching a global agreement to squeeze tax havens

On October 8, a group of 136 countries agreed to impose a global minimum tax of 15%, making it impossible for multinational corporations to move money around to avoid paying taxes. US President Joe Biden called this a landmark agreement, which will level the playing field.

The agreement was made to end the "race to the bottom" that has taken place over the past four decades, when countries have been racing to reduce taxes to attract multinational corporations, but also create an opportunity for them to move. roundabout profits to avoid paying high taxes.

However, some developing countries want to impose higher rates because they think their interests have been pushed aside in favor of rich countries. International organizations such as Oxfam criticized this new measure with many exceptions.

Of the 140 countries involved, 136 supported the agreement, while Kenya, Nigeria, Pakistan and Sri Lanka abstained.

The Organization for Economic Cooperation and Development (OECD), based in Paris, said the agreement would cover 90% of the global economy.

“We have taken another important step towards tax fairness. We now have a clear path to a fairer tax system, where global corporations are obligated to pay their fair share of taxes wherever they operate,” the minister said. German financier Olaf Scholz told Reuters.

However, when the text was still in ink, some people raised concerns about its applicability in practice. The Swiss Finance Minister requested that the interests of small companies be taken into account, and said that applying from 2023 is not feasible.

In the US, Republican senators say they are concerned the Biden administration is trying to get around the Senate to agree to the deal.

Under the US Constitution, any agreement needs to be supported by two-thirds of senators, or 67 votes. In recent years, Republicans have been hostile to any agreement and advocate cutting corporate taxes.

Google Tech News

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