(FRANKFURT, Germany) — Some 130 international locations have backed a worldwide minimal tax as a part of a worldwide effort to maintain multinational companies from dodging taxes by shifting their income to international locations with low charges.
The settlement introduced by the Group for Financial Cooperation and Improvement Thursday additionally offers for taxing the biggest international firms in international locations the place they earn income by means of on-line companies however could haven’t any bodily presence.
The settlement adopted a proposal from U.S. President Joe Biden for at the very least a 15% charge, an initiative that propelled the talks towards assembly a deadline for a deal by the center of this 12 months. The deal now might be mentioned by the Group of 20 international locations at conferences later this 12 months in hopes of ending the small print in October and implementing the settlement in 2023.
Underneath the deal, international locations may tax their firms’ overseas earnings in the event that they go untaxed by means of subsidiaries in different international locations. That may take away the motivation to make use of accounting and authorized schemes to shift income to low-rate international locations for the reason that income could be taxed at house anyway.
Not all the 139 international locations that joined the talks signed on to the deal. The proposal to tax international locations the place they’ve gross sales however no bodily presence excluded extractive firms akin to oil and mining and controlled banks.
The deal now faces extra technical work to fill in particulars and evaluate by the Group of 20 international locations, which characterize some 80% of the worldwide financial system. Extra dialogue is predicted on the assembly of the G-20 finance ministers in Venice subsequent week, after which on the full G-20 summit of nation leaders in October. The proposal to tax firms the place they’ve income however no bodily presence would require international locations to join a multilateral conference.
Within the US, Biden has proposed a 21% minimal charge on abroad earnings of huge US firms to discourage them from shifting income to tax havens. Biden’s US tax should first cross Congress, the place the Democratic president has solely a slender majority.