A total of 130 countries have agreed to a global tax reform ensuring standardized rules for multinationals wherever they operate, the Organisation for Economic Co-operation and Development (OECD) said on Thursday, although some EU states did not sign up.
The OECD said in a statement that global companies, including US behemoths Google, Amazon.com Inc, Facebook Inc and Apple Inc would be taxed at least 15 percent once the deal is implemented.
The new tax regime would add about US$150 billion to government coffers globally once it comes into force, which the OECD said it hoped would be in 2023.
Photo: AP
“The framework updates key elements of the century-old international tax system, which is no longer fit for purpose in a globalized and digitalized 21st century economy,” the OECD said.
The formal agreement follows an endorsement last month by the G7, and negotiations now move to a meeting of the G20 in Venice, Italy, on Friday and Saturday next week.
US President Joe Biden said that the latest deal “puts us in striking distance of full global agreement to halt the race to the bottom for corporate taxes.”
Germany, another backer of the tax reform, hailed it as a “colossal step towards tax justice,” while France said it was “the most important tax agreement in a century.”
British Chancellor of the Exchequer Rishi Sunak, whose country holds the G7 presidency, said “the fact that 130 countries across the world, including all of the G20, are now on board, marks a further step in our mission to reform global tax.”
However, Ireland and Hungary declined to sign up to the agreement reached in the OECD framework, the organization said.
Both countries are part of a group of EU nations also including Luxembourg and Poland that have relied on low tax rates to attract multinationals and build their economies.
Ireland, the EU home to tech giants Facebook, Google and Apple, has a corporate tax rate of 12.5 percent.
Irish Minister of Finance Paschal Donohoe has warned that the new rules could see Ireland lose 20 percent of its corporate revenue.
On Thursday, Donohoe said that Ireland still “broadly supports” the deal, but not the 15 percent tax floor.
“There is much to finalize before a comprehensive agreement is reached,” he said, adding that Ireland would “constructively engage” in further discussions.
Also expressing concerns is Switzerland, which said that it would support the measures despite “major reservations” and that it hoped the interests of “small, innovative countries” be taken into account.
An agreement for the implementation of the plan is planned for October.
Nine of the 139 participants in the talks have so far not signed on to the agreement.
China, whose position was being closely watched, as it offers tax incentives to key sectors, endorsed the agreement.
“It is in everyone’s interest that we reach a final agreement among all Inclusive Framework Members as scheduled later this year,” OECD Secretary-General Mathias Cormann said.
“This package does not eliminate tax competition, as it should not, but it does set multilaterally agreed limitations on it,” Cormann said, adding that “it also accommodates the various interests across the negotiating table, including those of small economies and developing jurisdictions.”
Ministers of finance have characterized a minimum tax as necessary to stem competition between countries over who can offer multinationals the lowest rate.
For Biden, a global tax agreement would help maintain US competitiveness, as he has proposed hiking domestic corporate taxes to pay for an infrastructure and jobs program with a price tag of about US$2 trillion.
UNCONVINCING: The US Congress questioned whether the company’s Chinese owners pose a national security risk and how the app might influence young users TikTok chief executive officer Shou Chew (周受資), confronted with an unforgiving, distrustful US Congress, tried to give answers in his testimony on Thursday that avoided offending either the US government or China. However, his evasiveness left Congress unsatisfied, with representatives hungrier than ever to punish TikTok for ties to its parent company ByteDance Ltd (字節跳動), based in Beijing. He did not bring his company any closer to a resolution. Politically, TikTok is in a tougher spot. Its executives had been discussing divesting from ByteDance to resolve US national security concerns, people familiar with the matter told Bloomberg. However, China this week said
The Investment Commission yesterday approved a Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) application to invest an additional US$3.5 billion in its Arizona subsidiary to manufactured advanced chips. The world’s largest contract chipmaker’s board of directors last month approved the funding project after TSMC started moving manufacturing equipment into the fab in December last year in preparation for the production of 4-nanometer chips next year. TSMC said it has also commenced the second phase of facility construction in Arizona. The second fab is to produce semiconductors using 3-nanometer technology in 2026. Altogether, TSMC plans to spend US$40 billion on the Arizona fabs, doubling its
Microsoft Corp has threatened to cut off access to its Internet search data, which it licenses to rival search engines, if they do not stop using it as the basis for their own artificial intelligence (AI) chat products, people familiar with the dispute have said. The software maker licenses the data in its Bing search index — a map of the Internet that can be quickly scanned in real time — to other companies that offer Web search, such as Apollo Global Management Inc’s Yahoo and DuckDuckGo. Last month, Microsoft integrated a cousin of ChatGPT, OpenAI’s AI-powered chat technology, into Bing. Rivals
KEY SECTOR: Taiwan’s new chip legislation is insufficient, and a more strategic ‘chip act’ that covers the whole semiconductor ecosystem is needed, MediaTek’s chairman said MediaTek Inc (聯發科) chairman Rick Tsai (蔡明介) yesterday urged the government to formulate a state semiconductor strategy and comprehensive “chip act” that includes local chip designers and smaller-scale semiconductor companies, as they are facing intensifying competition from China. The government is playing an increasingly important role in safeguarding the local semiconductor industry’s competitiveness, given that the US, the EU and Japan are offering hefty subsidies and significant tax incentives to build semiconductor capacity domestically, as they have realized the strategic importance of semiconductors, Tsai said. To implement such a program, the government should take steps to finance a “chip act,” Tsai said
RSS