OECD secretary-general says new tax deal sealed at G20 will be ‘fairer’

The landmark global minimum tax on corporations, which was supported by the Group of 20 on Saturday, will make international business taxation more equitable and help governments fund their recoveries from the pandemic, the head of the international organization that oversaw the negotiations said, according to US media reports.

Mathias Cormann, the secretary-general of the Organization for Economic Cooperation and Development, said that the deal “will make our international tax arrangements fairer and work better in a digitalized and globalized economy,” the Associated Press reported.

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The Paris-based OECD oversaw discussions that resulted in a 136-country agreement that would be submitted to the G-20 for ratification in the closing statement due Sunday, with national implementation beginning in 2023.

The agreement proposes for a worldwide corporate minimum tax of 15% to be enacted in countries where multinational corporations are headquartered. If their enterprises’ international revenues are not taxed or are only minimally taxed in low-tax nations, their home countries will collect a top-up tax.

The global minimum “completely eliminates the incentive for businesses around the world to restructure their affairs to avoid tax,” Cormann said, according to AP.

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Meanwhile, Cormann disagreed with criticism from tax justice advocates and some developing countries that the rate should have been higher, saying the deal was the consensus result of “give and take all the way around” that included developing countries. “A 15% corporate tax rate is 15% more than what we have,” he said.

However, the deal did fall short of US President Joe Biden‘s original call for a 21% minimum tax. Still, Biden tweeted his satisfaction.

“Here at the G20, leaders representing 80% of the world’s GDP — allies and competitors alike — made clear their support for a strong global minimum tax,” the president said in the tweet.

With inputs from the Associated Press