The most sweeping overhaul of the international tax system in a century is set to take a significant step forward this week, with nearly 140 countries including Ireland and Estonia expected to settle on a 15% global minimum tax rate.
Negotiators were on the verge of agreeing a rate on Thursday ahead of Friday’s meeting at the Organization for Economic Cooperation and Development, which is coordinating global tax talks. The tax rate has been the subject of intense conversation for months. If enacted, it could help end the decades-long haul over corporate taxation that has allowed tax havens to flourish and decimated countries of revenue.
The framework in question includes a global minimum tax of 15% that each country will adopt, and new rules that technology giants like Amazon and the like will force. Facebook and other large global businesses to pay taxes in the countries where their goods or services are sold, even if they do not have a physical presence there.
Ahead of Friday’s meeting, negotiators are on the language of a joint statement describing the tax rate, exceptions for certain types of companies, and the implementation period, which some nations want to prepare for years. European holdouts such as Ireland, Hungary and Estonia have been under intense pressure in recent months to join the agreement, which would require the approval of 27 EU countries.
After weeks of heated negotiations and pressure from the United States and France, Ireland said it was ready to accept a 15% minimum tax rate when Prime Minister Michael Martin told the Irish cabinet on Thursday that the rate was only for Facebook. and as applicable to multinational giants. Apple But not for Irish companies operating in Ireland.
At stake is Ireland’s low official corporate tax rate of 12.5% and a tax system that has helped global companies avoid paying taxes to other countries based where they make profits.
Estonia also signed off on a 15% rate on Thursday, according to a post on Twitter by OECD Secretary-General Mathias Korman.
The Treasury Department expressed hope that a deal would be finalized when the leaders of the Group of 20 major industrialized nations meet in Rome later this month.