136 countries agree to abolish tax havens – Blueprint Newspapers Limited

An important global deal to ensure that large corporations pay a minimum tax rate of 15% and make it more difficult for them to evade tax was finally reached after Ireland, Estonia and Hungary signed this elusive agreement.

The deal aims to end four decades of “race to the bottom” of governments that have sought to attract investment and jobs by only slightly taxing multinational companies and allowing them to seek low tax rates.

Negotiations have been going on for four years, moving online during the pandemic, with the backing of a deal from US President Joe Biden and the costs of the COVID-19 crisis giving it added momentum in recent months.

The deal aims to prevent large companies from making profits in low-tax countries like Ireland regardless of where their customers are located, an issue that has become increasingly urgent with the rise in power of tech giants who can easily do business across borders.

Of the 140 countries involved, 136 have supported the agreement, with Kenya, Nigeria, Pakistan and Sri Lanka abstaining for now.

The Paris-based Organization for Economic Co-operation and Development (OECD), which is leading the talks, said the deal would cover 90 percent of the global economy.

“Today’s agreement will make our international tax agreements fairer and more efficient,” said OECD Secretary General Mathias Cormann (former Minister of Finance of Australia).

“This is a great victory for effective and balanced multilateralism.

Organization for Economic Co-operation and Development (OECD) Secretary-General Mathias Cormann (right) and US Secretary of State Anthony Blinken. Photo: AAP

German Finance Minister Olaf Scholz said it was “another important step towards more tax justice”.

“We now have a clear path to a fairer tax system, where the world’s big players pay their fair share wherever they do business,” said his British counterpart Rishi Sunak.

With ink barely dry on the deal, some countries were already worried about its implementation.

Switzerland’s finance ministry demanded in a statement that the interests of small economies be taken into account and said the implementation date of 2023 was impossible.

Poland, which is concerned about the effect on foreign investors, said it will continue to work on the deal.

Central to the deal is a minimum corporate tax rate of 15 percent and allows governments to tax a larger share of the profits of foreign multinationals.

US Treasury Secretary Yellen hailed it as a victory for American families as well as international businesses.

“We have turned tireless negotiations into decades of increased prosperity, both for America and for the world. Today’s agreement represents a unique achievement for economic diplomacy, ”Yellen said in a statement.

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