136 states agree to impose global tax on major companies

The deal aims to end a four-decade effort, establishing clear rules for countries that have sought to attract investments and jobs by taxing multinational companies easily and effectively allowing them to pay less taxes.

The 15% floor agreed on is however, well below a corporate tax rate, which on average is about 23.5% in industrialized countries. Some developing countries that had demanded a higher rate said their interests were set aside to accommodate richer nations, while NGOs criticised the numerous exceptions to the deal. The negotiations have continued for four years, with the deal finally reached when Ireland, Estonia and Hungary gave up objections.

The deal aims to prevent large firms from earning profits in low-taxed countries like Ireland, regardless of where their clients are, an issue that has become increasingly urgent with the growth of fellow giants of the Big TechA could easily do business across borders.

Of the 140 countries involved, 136 supported the agreement, while Kenya, Nigeria, Pakistan and Sri Lanka abstained. The Paris-based Organisation for Co-operation and Economic Development (OECD), which has led the talks, said the agreement would cover 90% of the global economy.

“We have taken another important step towards greater tax justice,” said German Finance Minister Olaf Scholz. “Now we have a clear path to a more fair tax system, where major global players pay their fair share wherever they do business,” said British counterpart Richshi Sunak.

But, immediately after the agreement was reached, some countries have begun to raise concerns about its implementation. The Swiss Finance Ministry demanded that the interests of small economies be taken into account and said the implementation date in 2023 was impossible. /Scanv/