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One income tax for the whole world.  Finance ministers finalize the minimum rate

One income tax for the whole world. Finance ministers finalize the minimum rate

Governments around the world have been engaged in demanding negotiations to persuade a handful of nations about an international corporate tax agreement. In the summer, the G7 and G20 nations backed a deal that, if introduced, would force multinationals to pay taxes not only where they are located but also where they operate.

The international agreement is aimed primarily at giant companies, such as Amazon, Apple, Facebook or Google, who will have to tax even the money. Moreover, the company rate, which will be uniform for all states at 15 percent, can change.

Twenty-first century convention

Some countries, notably Hungary and Ireland, where corporate tax is less than 15 percent, have expressed skepticism. However, discussions by the Organization for Economic Co-operation and Development (OECD) seem to be bearing fruit.

“We are one millimeter away from the global agreement on a new international tax regime for the 21st century,” French Finance Minister Bruno Le Maire told CNBC. He added that he was “fully committed to paving the way for compliance.”

According to Mayra, the key point is to adopt an agreement on a new international tax regime by the end of this month at the latest. “We can sign the final version of the agreement either next week during a meeting in Washington or at the G20 meeting in Rome,” the French finance minister said.

European Commission Vice President Valdis Dombrovskis believes in a similar term. “We hope that the OECD agreement can be completed during October. We are also working with the member states of the European Union to ensure that everyone agrees to an international tax agreement,” he added.

He added that the European Commission was ready to submit legislative proposals that would ensure the validity of the unified document throughout the European Union.

Ireland changes its mind, Hungary wants time

Luxembourg Finance Minister Pierre Gramegna told CNBC on Tuesday that negotiations were very close to a compromise.

The Irish government has said the latest changes to the agreement are welcome to the country. The Financial Times, Deputy Prime Minister Leo Varadkar, said the new text “responds to many, if not all, of his country’s concerns”.

Meanwhile, Irish Environment Minister Eamon Ryan said he hopes and trusts Ireland will be part of the solution. Pascal Donohue, the country’s finance minister, said in Luxembourg that he would discuss the revised tax agreement at a government meeting on Thursday before expressing his views.

While Ireland has reconsidered its original position, Estonia and Hungary are still among the countries that have not yet agreed to the agreement.

Hungarian Foreign Minister Peter Szijjarto told CNBC on Wednesday that his country’s 9% corporate tax rate was a “huge advantage” and that tax competition was not harmful. He also said the 15 percent limit was “high”. Hungary has therefore proposed a ten-year implementation period and hopes that its counterparts will take the lead.