(AP) — More than 130 countries have endorsed a global minimum tax as part of a global effort to prevent multinational corporations from evading taxes
by shifting profits to low-tax jurisdictions.
The Organization for Economic Cooperation and Development agreement announced on Thursday also provides for taxing the world's largest corporations in countries where they earn profits through online businesses but have no physical
The agreement came in response to US President Joe Biden
's proposal for at least a 15% rate, which pushed the talks toward meeting a deadline for a deal
by the middle of this year. The deal will now be discussed by the Group of 20 countries at meetings later this year, with the hope of finishing the details in October and implementing the agreement in 2023.
Countries could tax their companies' foreign earnings if they go untaxed through subsidiaries in other countries under the agreement, removing the incentive to use accounting and legal schemes to shift profits to low-tax jurisdictions because the profits would be taxed at home anyway.
The proposal to tax countries where companies have sales but no physical presence excluded extractive companies such as oil
and mining, as well as regulated banks, from the 139 countries that participated in the talks.
The agreement now faces more technical work
to fill in details and review by the Group of 20, which represents roughly 80% of the global economy
. More discussion is expected at the G-20 finance ministers meeting in Venice next week, followed by the full G-20 summit of country leaders in October.
In the United States
, Biden has proposed a 21% minimum rate on big US corporations' overseas earnings to deter them from shifting profits to tax havens. Biden's US tax must first pass Congress
, where the Democratic
president has only a slim majority.