G20 leaders find agreement on global minimum corporate tax deal

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Leaders of the world’s 20 biggest economies (G20) will endorse an OECD deal on a global minimum corporate tax of 15 percent, draft conclusions of the two-day G20 summit showed on Saturday, with a view to have the rules in force in 2023.

Leaders have expressed “broad support” for the landmark deal that aims at deterring multinational companies from using clever accounting to elude taxes by using low-rate havens. Leaders spoke on the proposal during the opening session on Saturday of the summit, said officials from host country Italy.

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“We call on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting to swiftly develop the model rules and multilateral instruments as agreed in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023,” the draft conclusions, seen by Reuters, said.

Following formal approval to be reflected in Sunday’s closing statement, countries would enact the minimum tax on their own. The idea is that headquarters countries would top up a company’s tax to 15 percent if the firm’s profits went undertaxed in another country.

In October, 136 countries reached a deal on a minimum tax on global corporations, including internet giants like Google, Amazon, Facebook, Microsoft, or Apple to make it harder for them to avoid taxation by establishing offices in low-tax jurisdictions.

In today’s digital and global economy profits can come from intangibles such as copyrights and trademarks, and can thus be easily shifted to countries offering near-zero taxes in hopes of attracting revenue they otherwise wouldn’t have.

A key question is whether the US Congress will pass legislation to comply, since the US is home to 28 percent of the world’s 2,000 largest multinationals.

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