Global 15% corporate tax rate finalized, OECD says

By Ovunc Kutlu

ANKARA (AA) - The global system of imposing a minimum 15% tax rate on multinational corporations from 2023 was finalized on Friday, the Organisation for Economic Co-operation and Development (OECD) announced Friday.

The agreement was agreed by 136 countries, representing more than 90% of global gross domestic product (GDP).

The deal will reallocate more than $125 billion of profits from around 100 of the world’s largest multinational corporations, ensuring that these firms pay a fair share of tax wherever they operate and generate profits, according to the OECD.

"The global minimum tax agreement does not seek to eliminate tax competition, but puts multilaterally agreed limitations on it, and will see countries collect around $150 billion in new revenues annually," OECD said in a statement.

The agreement will be presented to the G20 Finance Ministers meeting in Washington D.C. on Oct. 13, and later to the G20 Leaders Summit in Rome at the end of this month, it noted.

The initial part of the deal, referred to as Pillar One, includes multinational corporations with global sales above €20 billion ($23.1 billion) and profitability above 10%.

Pillar Two includes imposition of the minimum tax rate of 15% on companies with revenue above €750 million ($868 million), and the new rate is estimated to generate around $150 billion in additional global tax revenues annually.

US Treasury Secretary Janet Yellen said earlier that the world is on the edge of a deal of new global tax rules that will start a new era of multilateralism.

President Joe Biden later said in a statement that the agreement will ensure that multinational corporations "pay their fair share."

"For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for shipping jobs and profits overseas. This race to the bottom hasn’t just harmed American workers ... Establishing, for the first time in history, a strong global minimum tax will finally even the playing field for American workers and taxpayers, along with the rest of the world," Biden said.