World Leaders Reach Accord on 15 Percent Global Minimum Corporate Tax

By:
Chris Gaetano
Published Date:
Oct 8, 2021
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It's official. Leaders of 136 countries have agreed to a deal that imposes a 15 percent global minimum corporate tax, a move intended to discourage venue shopping by firms looking for lower rates, the New York Times reported.

Beyond the 15 percent global tax, the accord would also drastically change the treatment of international tech companies. Essentially, they would be taxed based on where their products are sold, regardless of physical presence or lack thereof. 

The final holdout apparently was Hungary, which shed the last of its resistance earlier today after allowing the country a 10-year transition period rather than the five-year timeline that other countries are working with. Another holdout, the Republic of Ireland, came around after it received a commitment that Irish companies with revenues under 750 million euros would not face the new tax, and after the parties agreed to omit the phrase "at least" from the draft, ensuring that the minimum tax does not go higher. Estonia, another holdout, signed on after concerns were addressed regarding the digital goods tax. The president, Kaja Kallas, said that an "understanding" was achieved that the tax applies mostly to large international tech companies; the tax affects concerns with 20 billions of sales revenue, and no companies in that country meet this threshold. 

The deal will still need to be finalized at the next G20 meeting in Washington. Even then, however, for the international agreement to apply to the United States, Congress will  need to ratify it. The tax increase itself can be passed via reconciliation by Democrats, but finer details will still require Republican support. 

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