It seeks to introduce a global minimum corporate tax rate of 15 percent that would be applied to around 100 of the world's largest multinational companies.
Finance ministers from the Group of 20 (G20) major economies on Wednesday endorsed "the final political agreement" to revamp international corporate taxation, ensuring that multinational firms pay a fair share of tax around the world.
"This agreement will establish a more stable and fairer international tax system," G20 finance ministers and central bank governors said during the annual meetings of the International Monetary Fund (IMF) and the World Bank.
The G20 ministers called for swift development of "the model rules and multilateral instruments" to ensure that the new rules will come into effect at global level in 2023. Their communique came after the Organisation for Economic Cooperation and Development (OECD) announced last week that a major reform of the international tax system has been agreed by 136 countries and jurisdictions representing more than 90 percent of global gross domestic product (GDP).
The landmark deal will introduce a global minimum corporate tax rate of 15 percent, and reallocate more than US$125 billion of profits from around 100 of the world's largest and most profitable multinational companies to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.
What's in the Pandora Papers? And how the super-rich used tax loopholes to make themselves richer Teh documents show how many of the world's wealthiest people routinely avoided any type of tax by placing their assets in tax... #Global by #EconomicTimes https://t.co/xpfwYRzWTm— Market’s Cafe (@MarketsCafe) October 14, 2021
"This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalized and globalized world economy," said OECD Secretary-General Mathias Cormann.
The G20 ministers also noted in the communique that the economic recovery "remains highly divergent across and within countries and exposed to downside risks," in particular the possible spread of new variants of COVID-19 and uneven vaccination paces.
"We reaffirm our resolve to use all available tools for as long as required to address the adverse consequences of COVID-19, in particular on those most impacted," they said, vowing to avoid any premature withdrawal of support measures while preserving financial stability.
3 days after Brazilian Finance Minister Paulo Guedes was exposed in the Pandora Papers for profiting from his devaluation of the Real, Brazil's largest urban social movements marched to his office to ask why he halted social housing construction. My story for @telesurenglish pic.twitter.com/c5vO54Wy9t— BrianMier (@BrianMteleSUR) October 6, 2021