Historic decision forces corporations to pay minimum of 15% tax globally

Published: Monday, January 29, 2024 at 3:02 pm

Global Tax Reform: Multinational Corporations Face 15% Minimum Tax

**Major multinational corporations** like Amazon, Facebook, and Apple will soon face a **global minimum tax rate of 15%**, marking a significant shift in international tax policy. This landmark agreement, finalized by 138 countries after years of negotiation, aims to curb tax avoidance and ensure fairer taxation of corporate profits. The new rules, set to take effect in January 2024, will target companies with an annual turnover exceeding 750 million euros, impacting an estimated 7,000 to 8,000 businesses worldwide.

The core principle behind the reform is straightforward: companies will be taxed where they generate their profits, not necessarily where they are headquartered or produce goods. This move is designed to disincentivize the practice of shifting profits to tax havens, including those within the EU like Ireland and Hungary. The OECD estimates this initiative could generate an additional $200 billion in global tax revenue.

The impact on individual countries is expected to be substantial. Austria, for example, anticipates an increase of 100 million euros in tax revenue by 2026, potentially rising to 200-300 million euros annually in the long term. This is due to less profit shifting and tax competition.

While the agreement represents a historic step towards fairer taxation, some concerns remain. Critics argue that the 15% rate is too low and that the absence of participation from major economies like China and the USA could limit its effectiveness.

BNN's Perspective:

This global tax agreement is a positive step towards leveling the playing field and ensuring that large corporations contribute their fair share. While the 15% rate may be a compromise, it's a significant start. The success of this initiative will depend on consistent enforcement and the willingness of all nations to participate and adapt.

Keywords:

global minimum tax, multinational corporations, tax reform, Amazon, Facebook, Apple, tax havens, OECD, G20, international tax, corporate tax, tax avoidance, Ireland, Hungary, Austria, tax revenue, 15% tax rate, tax justice

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