The Organisation for Economic Co-operation and Development (OECD) says it has come to a tax agreement with nations around the world to levy on major tech companies. According to the announcement, those companies will pay 15% tax as a minimum rate no matter which country they operate in.
With 136 countries on board, the deal will cover 90% of global GDP when it comes into effect in 2023.
It is clear the deal is a major step forward in preventing tech companies from avoiding tax payments by operating in favorable countries. However, OECD is eager to point out the deal does not eliminate tax competition.
What it does do is ensure countries get tax payments. It is worth noting the agreement only covers companies with revenues of €750 million or more. Over the years, giants like Microsoft, Apple, and Google have all fallen foul of regulators for their tax avoidance practices.
Speaking of the deal, OECD Secretary-General Mathias Cormann, say:
“Today’s agreement will make our international tax arrangements fairer and work better. 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 lobalized and lobalized world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform.”
All countries that are part of the agreement will create their own domestic legislation next year to reflect the new tax. OECD will provide support to ensure nations can roll out their rules and make them effective.
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