On Thursday, US Treasury Secretary Janet Yellen announced that 130 countries, which account for more than 90% of global GDP, agreed to support the OECD proposal on minimum corporate tax rate.
The new rate could put an end to the practice of large corporations, in which they seek countries with lowest tax rates and move their headquarters there.
For decades, the United States has competed with other countries on taxation, cutting corporate tax rates first and watching other countries follow suit. Yellen said this competition has resulted in nothing, not to mention have deprived countries of gaining funds for important investments such as infrastructure and education.
The new treaty, which raises the global minimum corporate tax rate to 15%, will allow countries to generate about $ 150 billion tax revenue a year.
But the Organization for Economic Cooperation and Development (OECD) said some countries such as Ireland and Hungary have yet to join the reform
Meanwhile, all G20 countries have expressed their support for the agreement.
Included in the deal is the rule that taxes will go to the countries where large corporations are making profit, not to the countries they are headquartered.
Aside from this, the Biden administration is also pushing for a tax reform within the United States. So far, the proposal is to raise tax from 21% to 28%.
