G20 Economic Leaders Agree on Global Minimum Corporate Tax Framework

Agreement to Maintain Global Minimum Corporate Tax at 15%
End of Corporate Tax Cut Competition, Taxation on Multinational Corporations

[Image source=Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] At the G20 Finance Ministers and Central Bank Governors meeting held in Venice, Italy, a broad agreement was reportedly reached on the introduction of a global minimum corporate tax rate.

According to foreign media including the BBC on the 10th (local time), the G20 finance ministers concluded a two-day meeting held in Venice, Italy, starting on the 9th, and announced that they had reached a historic broad agreement on a new international tax reform to stop the race to cut corporate taxes. In particular, the G20 finance ministers approved the agreement led by the Organisation for Economic Co-operation and Development (OECD), in which 130 countries worldwide agreed on a global minimum corporate tax rate of 15%, and stated that they would urge all countries that have not yet joined the agreement to participate.

Regarding the digital tax, which was also an issue along with the global minimum corporate tax, it was reported that they agreed to comply with the OECD agreement and other prior accords. Earlier, at the G7 summit held in early last month, a general agreement on the digital tax was reached, followed by the release of a detailed agreement on the 1st of this month by the OECD/G20 Inclusive Framework (IF), a working group.

According to the agreement, multinational corporations will be subject to a minimum corporate tax rate of 15% or higher, and companies without a fixed place of business, such as Google and Facebook, will be required to pay taxes not only in their home countries where servers are located but also in countries where they actually provide services and generate profits.

This global tax reform plan is expected to be finalized at the G20 summit to be held in Rome, Italy, in October and come into effect around 2023.

German Finance Minister Olaf Scholz, at a press conference after the meeting, welcomed the decision, saying, "The G20 finance ministers have approved the introduction of a global minimum corporate tax rate," calling it "a very historic moment." Minister Scholz added, "I am absolutely confident that this global tax reform plan will reach an agreement at the G20 summit in October."

This content was produced with the assistance of AI translation services.