On Thursday, 130 countries, but not Ireland, reached an agreement on a reform of the taxation of multinationals, including the introduction of a minimum tax on profits “of at least 15%”, announced the Organization for Economic Co-operation and Development (OECD). “After years of intense work and negotiations, this historic package of measures will ensure that large multinational companies pay their fair share of taxes all over the world,” said Mathias Cormann, the OECD Secretary General who heads these negotiations, cited in a press release.
Ireland and Hungary do not sign
A small group of countries, including Ireland and Hungary, very reluctant to the proposed agreement that was under negotiation, did not sign the declaration reached today, according to the list provided by the Organization. The joint declaration, which is based on the agreement reached at the G7 at the beginning of June, also provides for a “more equitable” distribution of the profits between the countries where the head offices of the companies are located and those where they actually carry out their activity, even without physical presence. This component targets in particular the digital giants.
US Treasury Secretary Janet Yellen hailed “a historic day for economic diplomacy”, while her German counterpart Olaf Scholz spoke of a “colossal step towards greater tax justice”. For the French Minister of the Economy Bruno Le Maire, this is “the most important international tax agreement concluded for a century”.
Effective implementation in 2023
“This two-pillar plan will be of great help to states as they need to mobilize the tax revenues necessary to restore their budgets and public finances while investing in essential public services, infrastructure and measures required for post-recovery recovery. COVID is strong and lasting, “said the OECD in its press release.
The participants in the negotiations have given themselves until next October to “complete the technical work” and to prepare “an effective implementation plan in 2023”.
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