S.toric agreement in OECD headquarters between 130 countries for a minimum global tax to be applied to multinationals. This was announced in a note byOrganization explaining when the agreement will be operational the minimum rate of 15% at least to be applied to giants such as Google, Amazon, Facebook and Apple will bring in the coffers of the states at least 150 billion dollars more a year.
“The picture updates key elements of a centennial global tax system that is no longer adequate for its purposes in a globalized and digitized economy,” reads a statement. The formal agreement follows theendorsement of the G7 earlier this month. The negotiations now move to the financial G20 in Venice on 9 and 10 July. To the agreement the signature of nine of the 139 countries that participated in the negotiations is missing, including Ireland and Hungary. There deadline for the finalization of the technical aspects of the agreement is next October, for an entry into force in 2023.
The new framework updates, underlines the OECD, key elements of a century-old international tax system, which is no longer adequate in the current framework of a globalized and digitized economy. The two-pillar solution, explains the Organization, is the result of negotiations over the past decade coordinated by the organization and aims to ensure that large multinational companies (Mne) pay taxes where they operate and generate benefits, while strengthening legal certainty and the stability of the international tax system.
The first pillar, continues the OECD, will guarantee a fairer distribution of profits and taxation rights among countries for large multinationals, including digital ones. It will redistribute some of the taxation rights on multinationals from their countries of origin to the market countries in which they operate and make profits, regardless of whether they have a physical presence or not.
The second pillar aims to provide a framework for tax competition in corporate income taxes by introducing a global minimum tax that countries can impose to protect their tax base. This will greatly help states to mobilize the tax revenues needed to restore their budgets and public finances by investing in essential public services, infrastructure and measures necessary for a post-Covid recovery.
In the first pillar, the tax rights on more than $ 100 billion in profits are expected to be reallocated between jurisdictions every year. The minimum tax under the second pillar of at least 15% is estimated to generate an additional $ 150 billion. Other benefits will derive from this reform, stresses the OECD, in particular with the stabilization of the international tax system and greater legal certainty for taxpayers and tax administrations.