Leaders of the world’s biggest economies approved a landmark agreement on international tax reform on October 30th. It aims to put an end to tax havens by introducing a minimum global tax of 15% on the profits of multinationals.
All of the leaders in Rome endorsed the new rules, “including a global minimum tax that will end the damaging race to the bottom on corporate taxation,” U.S. Treasury Secretary Janet Yellen said in a statement, hailing it as a "historic" step.
The pact won support in principle from 136 governments in October under the auspices of the Organization for Economic Cooperation and Development. G-20 finance ministers endorsed a framework for the agreement in July.
The tax pact has two sweeping objectives. It intends first to halt the effort by multinational companies to shift profits into low-tax havens through a new global minimum tax of 15% for multinational companies. It also attempts to address the increasingly digital nature of international commerce by taxing companies, in part, on where they do business instead of where they book profits.
The mini-revolution, first mooted in 2017 and given a boost through the support of US President Joe Biden, is due to come into effect in 2023, but the deadline could slip. The deal faces several potential pitfalls before it comes into force and proves effective, including the creation of a credible dispute resolution mechanism.
Signatory countries must also follow through by enacting domestic legislation to implement the new tax rules and by formally approving a multilateral convention, to be drafted by the OECD.
Despite the Biden administration’s hearty backing, the overall deal may still face its biggest challenge in the U.S., where it’s uncertain whether the president can convince enough lawmakers to approve the new reallocation of taxes.
Publié le 02 novembre 2021