On 1 January (local time), the Organization for Economic Co-operation and Development (OECD) agreed to a global minimum corporate tax rate of 15%.
In the wake of the General Meeting of the Comprehensive Implementation Framework (IF), the OECD announced 130 countries have agreed to support the lowest global corporate tax rate.
Matthias Corman, the OECD Secretary-General, described the 15% corporate tax rate as a landmark agreement reached after long negotiations. “It will ensure that large multinational corporations pay their taxes fairly everywhere.”
“This is a historic day for economic diplomacy,” said US Treasury Secretary Janet Yellen.
A corporate tax rate of 15 percent was also demanded by the Biden administration. The Biden administration originally planned to raise the corporate tax rate from 21 percent to 28 percent in order to fund the American Jobs Plan. Instead of withdrawing this tax, it changed direction by requiring all companies to pay a minimum corporate tax of 15 percent.
The initiative will allow countries with 90 percent of the world’s gross domestic product (GDP) to join. China and India have also joined, but Hungary, Ireland, Estonia, Kenya, Nigeria, Peru, Sri Lanka, Barbados and St. Vincent and the Grenadines have not participated.
The Irish government will not take part in the declaration, according to the finance ministry.
Last month, the finance ministers of the seven major countries (G7) also agreed to lower the global corporate tax rate to 15%.
It is expected that the G20 will finalize the details during the finance ministers’ meeting in Venice, Italy, in July, and approve the proposal at its October summit.