Global Corporate Tax Rate Deal Agreed On by Over a Hundred Countries
The new deal, which stipulates where corporations should be taxed and for how much, is expected to start being implemented in 2023.
A group of some 136 countries has recently reached an agreement on corporate tax rates, with the Organization for Economic Cooperation and Development (OECD) announcing the move on Friday.
According to CNBC, the agreement stipulates a global minimum corporate tax rate of 15 percent, though small businesses apparently won’t be “hit with the new rates.”
“The landmark deal, agreed by 136 countries and jurisdictions representing more than 90 percent of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits,” OECD said in a statement.
Aside from establishing a minimum corporate rate, the agreement also forces companies to pay taxes where they operate, instead of only when they are headquartered, the media outlet notes.
The implementation of the deal is expected to begin in 2023.
US Secretary of the Treasury Janet Yellen lauded the agreement as “a once-in-a-generation accomplishment for economic diplomacy.”
“International tax policymaking is a complex issue, but the arcane language of today’s agreement belies how simple and sweeping the stakes are: When this deal is enacted, Americans will find the global economy a much easier place to land a job, earn a living, or scale a business,” a statement released by Yellen said.