US Secretary: 130 Countries Agree On 15% Global Tax For Digital Economy

The Organisation for Economic Co-operation and Development
(OECD) says 130 countries have agreed on a minimum 15 percent
global tax rate on large multinational enterprises (MNEs).

MNEs are companies with a global turnover above 20 billion euros
and profitability above 10 percent (i.e. profit before
tax/revenue).

In a statement on Thursday, the OECD said the agreement by 130
countries represents more than 90 percent of global GDP.

Earlier in June, Group of Seven (G7) countries had backed a
global minimum tax of at least 15% as part of a broader push by Joe
Biden’s administration to create a “fair and inclusive”
international economy.

The new global taxation rate will ensure that large corporations
pay a fair share of tax wherever they operate and earn profits to
keep such firms from dodging taxes by shifting their profits to
countries with low rates.

“Pillar One will ensure a fairer distribution of profits and
taxing rights among countries with respect to the largest MNEs,
including digital companies,” the international organisation said
in a document.

“It would re-allocate some taxing rights over MNEs from their
home countries to the markets where they have business activities
and earn profits, regardless of whether firms have a physical
presence there.

“Pillar Two seeks to put a floor on competition over corporate
income tax, through the introduction of a global minimum corporate
tax rate that countries can use to protect their tax bases.

“The two-pillar package will provide much-needed support to
governments needing to raise necessary revenues to repair their
budgets and their balance sheets while investing in essential
public services, infrastructure and the measures necessary to help
optimise the strength and the quality of the post-COVID
recovery.”

Janet Yellen, US treasury secretary, said, “Today is an historic
day for economic diplomacy. Lower tax rates have not only failed to
attract new businesses, they have also deprived countries of
funding for important investments like infrastructure, education,
and efforts to combat the pandemic.”

“President Biden has spoken about a “foreign policy for the
middle class,” and today’s agreement is what that looks like in
practice”.

The implementation plan for the new deal is expected to be
finalised in October 2021.

The Organisation for Economic Co-operation and Development
(OECD) says 130 countries have agreed on a minimum 15 percent
global tax rate on large multinational enterprises (MNEs).

MNEs are companies with a global turnover above 20 billion euros
and profitability above 10 percent (i.e. profit before
tax/revenue).

In a statement on Thursday, the OECD said the agreement by 130
countries represents more than 90 percent of global GDP.

Earlier in June, Group of Seven (G7) countries had backed a
global minimum tax of at least 15% as part of a broader push by Joe
Biden’s administration to create a “fair and inclusive”
international economy.

The new global taxation rate will ensure that large corporations
pay a fair share of tax wherever they operate and earn profits to
keep such firms from dodging taxes by shifting their profits to
countries with low rates.

“Pillar One will ensure a fairer distribution of profits and
taxing rights among countries with respect to the largest MNEs,
including digital companies,” the international organisation said
in a document.

“It would re-allocate some taxing rights over MNEs from their
home countries to the markets where they have business activities
and earn profits, regardless of whether firms have a physical
presence there.

“Pillar Two seeks to put a floor on competition over corporate
income tax, through the introduction of a global minimum corporate
tax rate that countries can use to protect their tax bases.

“The two-pillar package will provide much-needed support to
governments needing to raise necessary revenues to repair their
budgets and their balance sheets while investing in essential
public services, infrastructure and the measures necessary to help
optimise the strength and the quality of the post-COVID
recovery.”

Janet Yellen, US treasury secretary, said, “Today is an historic
day for economic diplomacy. Lower tax rates have not only failed to
attract new businesses, they have also deprived countries of
funding for important investments like infrastructure, education,
and efforts to combat the pandemic.”

“President Biden has spoken about a “foreign policy for the
middle class,” and today’s agreement is what that looks like in
practice”.

The implementation plan for the new deal is expected to be
finalised in October 2021.