German Finance Minister Olaf Schulz said the measure for a global minimum income tax should come into effect as soon as possible. “Our goal is for the agreement to enter into force in 2023,” he said. The last open questions will be clarified by October of this year, when the G-20 summit takes place.
The worldwide taxation of large multinational corporations of at least 15 percent of profits is often described as a milestone toward greater tax fairness. To date, 131 countries have ratified it. According to the OECD, this lower rate could increase global tax revenue by about $150 billion (CZK 3.3 trillion) annually.
The European Commission said the new rules would “bring justice and stability to the international corporate tax system” and would allow the largest companies to pay taxes wherever they do business. “A minimum global tax of at least 15 per cent will help reduce rigid tax planning and stop competition for the lowest possible corporate tax,” the EU executive said.
The change in global taxes was supported by the finance ministers of the Group of Seven most advanced countries at the beginning of June. This is the first major revision of global tax rules in the last generation. The goal is to modernize the tax system to fit the digital age. The main requirement is that large digital companies pay taxes where they do business and not where they have registered subsidiaries.
G20 members also warned today that the economic recovery from the COVID-19 pandemic “could particularly negatively affect the spread of novel coronavirus variants and different vaccination rates.” They called for the speedy distribution of vaccines, but they did not make any commitment in this regard.
The G20 members are Argentina, Australia, the United States of America, Canada, Japan, Britain, France, Germany, China, Russia, Indonesia, India, Italy, Mexico, South Africa, Saudi Arabia, South Korea, Turkey and the European Union. The group accounts for 80 percent of global GDP and 75 percent of world trade.
New rules for global taxation from EU countries are not supported by Ireland, Estonia and Hungary, from non-European countries such as Kenya, Nigeria and Sri Lanka.