136 countries sign landmark pact to enforce at least 15% corporate tax on large multinationals

136 countries sign landmark pact to enforce at least 15% corporate tax on large multinationals

@OECD

A group of 136 countries have signed a landmark global treaty to enforce a corporate tax rate of at least 15% for large multinationals. The deal marks a shift in tax policy because it not only imposes a minimum corporate tax rate, but it also forces companies to pay taxes where they operate – not just where they have their headquarters. The Organization for Economic Cooperation and Development (OECD) announced this major breakthrough, after years of disagreement. The OECD said, the landmark deal, agreed by 136 countries and jurisdictions represents more than 90% of global GDP. It will also reallocate more than 125 billion dollar of profits from around 100 of the world’s largest and most profitable Multinational enterprises to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.

The floor under corporate tax will come in from 2023.

US President Joe Biden said, establishing a strong global minimum tax will provide even the playing field for American workers and taxpayers, along with the rest of the world.

UK Chancellor Rishi Sunak said the deal will upgrade the global tax system for the modern age.

German Finance Minister Olaf Scholz said, we have taken another important step towards more tax justice.

Out of the 140 countries involved, 136 supported the deal, with Kenya, Nigeria, Pakistan and Sri Lanka abstaining for now.