Yahoo – AFP, Jürgen HECKER, July 1, 2021
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| US digital giants are the main targets of the new tax |
A total of 130 countries have agreed a global tax
reform ensuring that multinationals pay their fair share wherever they operate,
the OECD said on Thursday, but some EU states refused to sign up.
The Organization for Economic Co-operation and
Development said in a statement that global companies, including US behemoths
Google, Amazon, Facebook, and Apple would be taxed at a rate of at least 15
percent once the deal is implemented.
The new tax regime will add some $150 billion to
government coffers globally once it comes into force, which the OECD said it
hoped would be in 2023.
"The framework updates key elements of the
century-old international tax system, which is no longer fit for purpose in a
globalised and digitalised 21st century economy," the OECD said.
The formal agreement follows an endorsement by the G7
group of wealthy nations last month, and negotiations now move to a meeting of
the G20 group of developed and emerging economies on July 9-10 in Venice,
Italy.
US President Joe Biden said the latest deal "puts
us in striking distance of full global agreement to halt the race to the bottom
for corporate taxes."
Germany, another backer of the tax reform, hailed it
as a "colossal step towards tax justice", and France said it was
"the most important tax agreement in a century".
British finance minister Rishi Sunak, whose country
holds the G7 presidency, said "the fact that 130 countries across the
world, including all of the G20, are now on board, marks a further step in our
mission to reform global tax".
'In everyone's interest'
But EU low-tax countries Ireland and Hungary declined
to sign up to the agreement reached in the OECD framework, the organisation
said, highlighting lingering divisions on global taxation.
Both countries are part of a group of EU nations also
including Luxembourg and Poland that have relied on low tax rates to attract
multinationals and build their economies.
Ireland, the EU home to tech giants Facebook, Google
and Apple, has a corporate tax rate of just 12.5 percent.
Irish Finance Minister Paschal Donohoe has warned that
the new rules could see Ireland lose 20 percent of its corporate revenue.
On Thursday, Donohoe said Ireland still "broadly
supports" the deal, but not the 15-percent tax floor.
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| The tax plan got a much-needed boost from Joe Bidens's administration |
"There is much to finalise before a comprehensive
agreement is reached", he said, adding that Ireland would
"constructively engage" in further discussions.
Also expressing concerns is Switzerland -- known for
its banking secrecy laws -- which said it would support the measures despite
"major reservations" and that it hoped the interests of "small,
innovative countries" be taken into account.
An agreement for the implementation of the plan is
planned for October.
Nine of the 139 participants in the talks have so far
not signed on to the agreement.
But China, whose position was being closely watched as
it offers tax incentives to key sectors, endorsed the agreement.
"It is in everyone's interest that we reach a
final agreement among all Inclusive Framework Members as scheduled later this
year," said OECD Secretary General Mathias Cormann.
"This package does not eliminate tax competition,
as it should not, but it does set multilaterally agreed limitations on
it," Cormann said, adding that "it also accommodates the various
interests across the negotiating table, including those of small economies and
developing jurisdictions".
'More equitable' global economy
Finance chiefs have characterised a minimum tax as
necessary to stem competition between countries over who can offer
multinationals the lowest rate.
For Biden, a global tax agreement will help maintain
US competitiveness since he has proposed hiking domestic corporate taxes to pay
for an infrastructure and jobs programme with a price tag of around $2
trillion.
Biden -- whose tax plans face a potentially uphill
battle in Congress -- hailed an "important step in moving the global
economy forward to be more equitable for workers and middle class families in
the United States and around the world."
He noted that those nations who signed up make up more
than 90 percent of the world's economy.
The OECD's statement said the package "will
provide much-needed support to governments needing to raise necessary
revenues" to fix their budgets and invest in measures to back the
post-Covid recovery.
Oxfam, a charity, meanwhile said that the deal fell
short of a tax level needed to give poorer countries a sufficient share of
additional tax revenue.
Calling the deal "skewed-to-the-rich and
completely unfair", Oxfam said that signatories had missed a "once-in-a-lifetime
opportunity to build a profoundly more equal world".
