Janet Yellen Celebrates Controversial ‘Once-In-A-Generation’ Global Minimum Corporate Tax Agreement

On Friday, the Organization for Economic Cooperation and Development (OECD) announced that they had agreed to a global minimum corporate tax rate of 15%, after years of debate and disagreement.

“The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits,” the OECD said in a statement.

136 jurisdictions out of the 140 members of the OECD and G20 “Inclusive Framework on BEPS” joined the “Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.”

“Today’s agreement will make our international tax arrangements fairer and work better,” said OECD Secretary-General Mathias Cormann. “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. We must now work swiftly and diligently to ensure the effective implementation of this major reform.”

This agreement marks a significant change for smaller economies that, in the past, have relied on lower tax rates to attract larger corporations. Some such countries which were long-term opponents of raising corporate tax rates — such as Ireland and Hungary — were convinced to join after some alterations were made to the original proposal. One such important change was the stipulation that the 15% tax rate would not be increased and that the new rates would not apply to small businesses. – READ MORE