PARIS, July 1 (Reuters) After two days of talks, 130 countries representing more than 90 percent of global GDP have endorsed plans for new rules that will tax businesses at a rate of at least 15 percent.
This global minimum corporate tax could bring in around $ 150 billion annually in additional global tax revenue, said the Paris-based Organization for Economic Cooperation and Development, which hosted the talks.
New rules on where the largest multinationals are taxed would shift taxation rights on profits over $ 100 billion to countries where the profits are made, she added.
“With a global minimum tax, multinational corporations will no longer be able to pit countries against each other to lower tax rates,” said US President Joe Biden in a statement.
“They will no longer be able to avoid their fair share by hiding profits made in the United States or any other country in countries with lower taxes.”
The technical details will be worked out by October so that the new rules can be introduced by 2023, according to a statement from the countries that supported the agreement.
The nine countries that did not sign were the low-tax EU members Ireland, Estonia and Hungary, as well as Peru, Barbados, St. Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya.
The new minimum tax rate of at least 15 percent would apply to companies with sales in excess of 750 million euros ($ 889 million), excluding the shipping industry.
The new rules on taxing multinational corporations are designed to ensure the right to a fairer distribution of their profits among countries, as the advent of digital commerce has allowed large tech companies to post profits in low-tax countries regardless of where the money is made.
Taxable companies would be multinational corporations with global sales of over 20 billion euros and a pre-tax profit margin of over 10 percent, whereby the sales threshold could possibly drop to 10 billion euros after seven years after a review.
Extractive industries and regulated financial services are exempt from the rules on taxing multinational corporations.