A global agreement on imposing a minimum 15% tax on the profits of multinational companies has been agreed by 136 nations, the Organization for Economic Co-operation and Development (OECD) announced on Friday, according to Reuters.

The major reform of the international tax system completed by the OECD will ensure that multinational enterprises (MNEs) are subject to a tax rate of at least 15% from 2023.

Romania, one of the major beneficiaries of the global agreement

The measure will make it more difficult to avoid taxation, and Romania – a country where multinationals hold a significant share of the economy – will benefit from limiting the outsourcing of profits.

Romania is more of a labor market for international companies and less a real beneficiary of the taxation of many economic activities.

OECD major announcement on global taxation of multinationals

The major reform of the international tax system completed by the OECD will ensure that multinational enterprises (MNEs) are subject to a tax rate of at least 15% from 2023.

“The benchmark agreement, agreed by 136 countries and jurisdictions, which accounts for more than 90% of global GDP, will also reallocate more than $ 125 billion in the profits of the largest multinational companies in all countries in the world. in order to ensure that these companies pay fair tax contributions wherever they carry out activities and generate profits “, states the OECD.

Agreement supported by all OECD and G20 countries

After years of intense negotiations to bring the international tax system to the 21st century, 136 jurisdictions (out of the 140 members of the Framework including the OECD) have joined the declaration on the two-pillar solution to address the tax challenges arising from the Digitalisation of the economy.

Once Estonia, Hungary and Ireland have joined the agreement, the agreement is now supported by all OECD and G20 countries. Four countries – Kenya, Nigeria, Pakistan and Sri Lanka – have not yet joined the agreement.

What is the global agreement by which multinationals are taxed

The Global Minimum Tax Agreement does not aim to eliminate tax competition, but is based on the “Two Pillar Solution”, to be proposed for approval by the Group of Developed and Emerging States (G20).

The “first pillar” will ensure a fairer distribution of profits and tax rights between countries in relation to the largest and most profitable multinationals.

Pillar Two introduces a minimum tax rate of 15%. The new minimum tax rate will apply to companies with revenues over EUR 750 million and is estimated to generate around $ 150 billion in additional tax revenue annually. Other benefits will also emerge from the stabilization of the international tax system and increased tax certainty for taxpayers and tax administrations.

“Today’s decision will make our international tax agreements more equitable and work better,” said OECD Secretary-General Mathias Cormann.

The reaction of Ireland, the country where Google, Facebook and Apple are based

After several weeks of pressure from the US and France, Ireland has announced that it will stop imposing a small corporate tax, a step that has been a cornerstone of its economic development.

Ireland has given up its opposition to implementing the global profit tax review initiative, agreeing to drop the 12.5% ​​level for multinationals, a strong boost for regulatory efforts, Reuters reports.

The Dublin authorities have criticized the proposal to provide for a minimum tax of 15% applicable to companies in each country where they operate, with the aim of taxing multinationals where they make a profit and not just where they are registered.

“The government has now approved my recommendation that Ireland join the international consensus. It is a correct, sensitive and pragmatic decision “, declared on Thursday, October 7, the Minister of Finance, Paschal Donohoe.

Why Ireland opposed raising the tax for multinationals

The 12.5% ​​income tax in Ireland brings prosperity to the country and “is a key element of our decades-long economic policy,” said Donohoe, who said an increase in this tax rate would create problems for companies that they invested in Ireland.

According to the Organization for Economic Co-operation and Development (OECD), which led the negotiations, setting a minimum tax of 15% would generate additional annual revenues of 150 billion euros ($ 175 billion).

Of the 139 countries that participated in the negotiation of the agreement under the auspices of the OECD, 9 states did not want to sign it, including Ireland, Estonia and Hungary.

Due to the low profit tax, Dublin has attracted companies such as Google, Facebook and Apple, and now the employment rate at multinationals exceeds the proportion of 1 in 10 people. The signing of the agreement by Ireland is a step towards its global adoption.

Therefore, the tax will no longer be due only where the multinationals have registered their headquarters and thus managed to pay lower taxes through tax optimization practices.

Companies with a worldwide turnover of over 20 billion euros and a profit rate of over 10% are especially considered.

The aim is for multinational companies, especially those in the digital sector, which have benefited greatly from the pandemic, to stop paying ridiculous taxes on their income.

“Pillar 2” corresponds to the establishment of a minimum effective tax of at least 15% on the profit of multinational companies.

A state will be able to tax the profits obtained abroad by a company registered in that state of origin if it has been taxed abroad at a lower percentage than this minimum threshold, in order to compensate for the difference.

States will be able to collect new revenues of $ 150 billion annually

OECD Secretary-General Mathias Cormann: “Today’s agreement will make the international tax system fairer and better. It is a major victory for balanced and effective multilateralism. “

States will collect $ 150 billion in new revenue annually, and $ 125 billion in profit tax rights will revert to countries where multinationals earn revenue.

OECD statement: “This reference agreement agreed by 136 countries and jurisdictions accounts for over 90% of world GDP and will relocate $ 125 billion in profits generated by about 100 of the most profitable multinationals in other countries in the world.” ensuring that companies pay a fair tax no matter where they operate and generate profits. ”

sources: reuters, adevarul.ro, mediafax,

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