The leaders of the world’s 20 leading economies on Saturday agreed to a universal minimum corporate tax rate of at least 15 percent, which will commence in 2023.
The new agreement is aimed at avoiding multinational companies from taking exploiting complacent tax systems and failing to pay taxes where they conduct their business.
US treasury secretary, Janet Yellen, stated that heads of governments of the nations that make up 80 percent of the world economy backed the reform at the Rome summit on Saturday.
“Today, every G20 head of state-endorsed a historic agreement on new international tax rules, including a global minimum tax that will end the damaging race to the bottom on corporate taxation,” said Yellen.
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“It’s a critical moment for the US and the global economy.”
She congratulated US President Joe Biden for the “achievement”.
In his opening remarks at the summit, Italy’s Prime Minister, Mario Draghi, stated that the success of COVID-19 vaccines and the push to bring about economic recovery demonstrates that there is cause for optimism.
“Together we are building a new economic model and the world will be all the better for it,” he said.
He described the tax deal as “a historic agreement for a fairer and more effective international tax system”.
“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 (the) global level in 2023,” the draft conclusions, seen by Reuters, reads.
The conclusions are to be formally adopted on Sunday.
Russian President Vladimir Putin and his Chinese counterpart President Xi Jinping are participating remotely.
