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Sunday, October 24, 2021

A global deal aimed at ending tax havens gains momentum

The most sweeping overhaul of the international tax system in a century is poised to take a significant step forward this week, with nearly 140 countries, including Ireland, expected to settle on a 15 percent global minimum tax rate.

By: New York Times | Washington |
Updated: October 9, 2021 12:04:27 am
Amazon, United States, Corporate Taxes, Facebook, Tax havens, tax Shelters, Apple Inc, Indian expresss, Indian express news, world newsGoogle's European headquarters in Dublin on July 5, 2021. (The New York Times)

Written by Alan Rappeport and Liz Alderman

The most sweeping overhaul of the international tax system in a century is poised to take a significant step forward this week, with nearly 140 countries, including Ireland and Estonia, expected to settle on a 15% global minimum tax rate.

Negotiators were on the brink of agreeing to the rate Thursday, before a Friday meeting at the Organization for Economic Cooperation and Development, which has been coordinating the global tax talks. The tax rate has been the subject of months of intense negotiations. If enacted, it could help end a decades long race to the bottom on corporate taxation that has allowed tax havens to flourish and has drained countries of revenue.

The framework under consideration includes a global minimum tax of 15% that each country would adopt, and new rules that would force technology giants like Amazon and Facebook and other big global businesses to pay taxes in countries where their goods or services are sold, even if they have no physical presence there.

Before Friday’s meeting, negotiators have been grappling over the language of a joint statement describing the tax rate, exceptions for certain kinds of companies and the implementation period, which some nations want to be drawn out for years. European holdouts such as Ireland, Hungary and Estonia have been under intense pressure in recent months to join the agreement, which will require the approval of the 27 European Union countries.

After weeks of heated negotiations and pressure from the United States and France, Ireland said it was ready to accept a 15% minimum tax rate after Prime Minister Michael Martin told the Irish Cabinet on Thursday that the rate would only apply to multinational giants like Facebook and Apple but not to Irish companies operating in Ireland.

At stake has been Ireland’s low official corporate tax rate of 12.5% and a tax system that has helped global companies based there avoid paying taxes to other countries where they make profits.

Estonia also signed on to the 15% rate Thursday, according to a post on Twitter by OECD Secretary-General Mathias Cormann.

The Treasury Department expressed optimism that a deal would be finalized when the leaders of the Group of 20 leading industrial nations meet in Rome later this month.

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