WASHINGTON (Pakistan Point News / Sputnik - 09th October, 2021) The global minimum corporate tax rate of 15% agreed by the Organization for Economic Co-operation and Development (OECD) will finally commit companies to "paying their fair share" instead of nations undercutting one another in taxes, US President Joe Biden said Friday.
The global tax accord announced by the on Friday will "bring us one step closer to finally ending that race to the bottom, to ensure that profitable corporations pay their fair share, and provide governments with the resources to invest in their workers and economies", Biden said in a statement issued by the White House.
Race to the bottom describes countries undercutting one another on tax rates, in order to attract or retain economic activity.
Critics, including Biden, have severely criticized the practice as ultimately benefiting the world's richest corporations that often pay next to nothing on taxes in countries they operate while depriving governments of billions of Dollars of capital needed for development.
Biden has particularly chafed at US-owned corporations that have changed their headquarters to international locations to escape paying American corporate taxes that are set at 21%. He has proposed raising the US rate and has made it his mantra that companies "pay their fair share."
"This race to the bottom hasn't just harmed American workers, it's put many of our allies at a competitive disadvantage as well," the president said in the White House statement.
The OECD reiterated the president's words in a statement it issued Friday.
"The global minimum tax agreement does not seek to eliminate tax competition, but puts multilaterally agreed limitations on it, and will see countries collect around USD 150 billion in new revenues annually," the OECD said.
It added that more than $125 billion of profits from around 100 of the world's largest and most profitable multinational enterprises will be shared worldwide, "ensuring that these firms pay a fair share of tax wherever they operate and generate profits."
Until the agreement was announced Friday, there had been doubts whether enough countries would come on board with it. But the OECD said Friday that even Ireland � which had one of the lowest tax rates at 12.5% � had joined the accord. Other notable signatories were Hungary and Estonia, with tax rates of 15% and 20%, respectively.
Four countries � Kenya, Nigeria, Pakistan and Sri Lanka � have yet to join, the OECD said, without giving reasons.
The international community intends to sign the multilateral convention in 2022 and hopes to implement it in 2023.
