After four years, the G20 agrees on the historic global minimum tax on multinationals

With information from EFE

The first day of the G20 leaders’ summit in Rome today achieved its first objective: the adoption, after lengthy negotiations, of a global minimum tax on multinationals to balance the international tax system.

“After four years of intense debate, a historic agreement has been reached on a solution based on two pillars to face the fiscal challenges that have emerged with the digitization and globalization of the economy,” assured sources from the Italian presidency of the forum of the twenty powers.

The G20 heads of state or government agreed to a global minimum corporate tax of at least 15% to achieve a fairer tax system and prevent them from taking advantage of complacent tax regimes and not paying taxes where they operate.

One of the most enthusiastic was the president of the United States, Joe Biden, who celebrated the agreement and assured that in this way the international community “will help people by making companies contribute by paying their share” of taxes.

G20: two pillars to tax multinationals

The mechanism, to be adopted by 2030, follows the path already outlined by the Organization for Economic Cooperation and Development (OECD) of a system based on two pillars.

The first fixes that the volume of the residual profit of the companies, that is, the remainder after the country where the headquarters is located has kept the tax corresponding to 10% of the profitability, will be distributed among the countries where they operate.

The second establishes a minimum rate for companies of 15% for those with a turnover of at least 750 million euros.

The OECD has already reported that 136 countries and jurisdictions, which cover more than 90% of world GDP out of the 140 that participate in the negotiations, agreed that for the first pillar the figure is 25% of that residual profit, after until now was arguing between a range between 20% and 30%.

This refers to large companies with a worldwide turnover of more than 20,000 million euros and a profitability of more than 10%, and the distribution of profits would be made between countries where each company has revenues of more than one million euros (250,000 euros in small state).

G20: Russia and China did not arrive

The summit had two exceptional absences, which somehow put the sponsored multilateralism in check: that of the Russian president, Vladimir Putin, who by videoconference demanded reciprocal recognition of the vaccines between blocs.

And the president of China, Xi Jinping, who thousands of kilometers away asked his peers to be “an example” in reducing carbon emissions.