an agreement According to the organization, it will ensure that large companies pay a fair share of taxes wherever they do business and generate profits. “Our international tax system will be more fair and work better thanks to today’s agreement,” said OECD Secretary-General Matthias Kormann. “It is a far-reaching agreement that ensures that our international tax system will serve its purpose well in a digital and globalized global economy,” he added.
The organization also said that with the minimum rate, states would collect about $150 billion in new revenue annually, while the rights to tax profits over $125 billion would pass to countries where multinational corporations make money.
The agreement has also been agreed upon by the current “no-takers”, namely Ireland, Hungary and Estonia, which have low corporate taxes, which attract companies to their countries.
Four countries – Kenya, Nigeria, Pakistan and Sri Lanka – have not yet joined the agreement.
Countries that have endorsed the agreement should start using the minimum global tax rate of 15 percent from 2023. Some officials have described it as too narrow a deadline.
Switzerland on Friday called for more time and legal certainty in implementing new tax measures. “Switzerland demands that the interests of powerful small economies be taken into account in implementation and that legal certainty be provided to the companies involved,” the finance ministry said in a statement. He added that it would not be possible to introduce new rules until 2023 as expected by the Organization for Economic Cooperation and Development.
Oxfam has also expressed doubts that tax havens will not disappear. “When it comes to taxation, the devil is in the details, like a dense web of exceptions,” said Susana Ruiz, who focuses on tax issues.
The Hungarians and the Irish also agreed
Hungary will join the agreement. This came on Friday, before the official announcement by the Organization for Economic Co-operation and Development, Finance Minister Mihaly Varga. According to him, the conditions proposed by Budapest, including a ten-year transition period, were fulfilled. The agreement, backed by the Organization for Economic Co-operation and Development, assumes the global average will be at least 15 percent. However, according to Varga, Hungary will maintain the current rate of 9 percent, thanks to a specially designed mechanism for global tax collection, Reuters reported.
The Dublin government announced on Thursday that Ireland will support a global tax deal. The country is still benefiting from its low corporate tax of 12.5 per cent, which has tempted many multinationals, such as Apple, Google and Facebook, to set up their European headquarters in Ireland. “This ground-breaking agreement will address the global tax challenges of digitalization and provide the security and stability that big business and government need. I am convinced that Ireland will be an attractive home for multinationals in the future,” said Irish Finance Minister Paschal Donohue.
In response, Facebook said it had long advocated overhauling global tax rules. “We recognize that this could mean paying higher taxes in different places,” admitted Nick Clegg, Facebook’s vice president of global affairs. “The tax system should inspire public confidence while providing security and stability for businesses. We are pleased that an international agreement has emerged,” he added.
The agreement aroused enthusiastic reactions from many statesmen.
For example, US President Joe Biden responded positively to him, supporting its creation. “For decades, American workers and taxpayers have paid extra for a tax system that rewards multinationals for moving jobs and profits overseas,” he said. “This flight for lower taxes not only hurt American workers, but also put many of our allies at a competitive disadvantage,” he added.
Then US Treasury Secretary Janet Yellen said: “We have turned tireless negotiations into decades of increased prosperity – for America and the world. Today’s deal is a success that economic diplomacy will achieve once in a generation.”
European Commission President Ursula von der Leyen also welcomed the agreement. “It’s a historic moment. It’s a big step forward in establishing a fairer tax system,” she said. “Requiring large corporations to pay the appropriate amount of tax is not just a public financial issue. “It is above all a question of fundamental justice,” she added.
“Today we have taken another important step towards greater tax fairness,” German Finance Minister Olaf Schulz said. “This agreement paves the way for a real financial revolution,” said French Finance Minister Bruno Le Maire.
Czech Finance Minister Alina Chilrova (for YES) also welcomed the agreement. According to her, it is not about punishing multinationals, but about settling taxes and setting fair terms for all.
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