'Closing Tax Loopholes' Global Minimum Corporate Tax Adoption Accelerates... Agreement by 136 Countries

OECD "15% Global Minimum Corporate Tax Adopted by 136 Countries"
Yellen Calls It a "Historic Agreement"
Significant Time and Debate Expected in National Legislation and Processes

Mathias Cormann (right), Secretary-General of the Organisation for Economic Co-operation and Development (OECD), and Tony Blinken (left), U.S. Secretary of State, are holding a joint press conference as they conclude the 60th OECD Ministerial Council Meeting (MCM) on the 6th (local time) in Paris, France.
[Image source=Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The global minimum corporate tax rate introduction, actively promoted by the Joe Biden administration, has been agreed upon by 136 countries. While a revolutionary change in the global tax system is expected, many challenges remain before implementation.

The Organisation for Economic Co-operation and Development (OECD) announced on the 8th (local time) that 136 countries have agreed on a 15% global minimum corporate tax rate.

The OECD stated, "This groundbreaking deal agreed upon by 136 countries and jurisdictions representing over 90% of the world's Gross Domestic Product (GDP) will require about 100 of the world's largest and most profitable multinational corporations to pay more than $125 billion in taxes to countries worldwide," adding, "They must pay fair taxes wherever they operate and generate profits."

This agreement was reached after Ireland, which had actively attracted multinational corporations with low corporate tax rates, agreed. Hungary, which had also hesitated, joined the agreement recognizing that actual implementation would take a considerable amount of time.

As a result of this measure, the taxation practices targeting large multinational corporations will be completely changed, and the practice of these companies hiding profits in tax havens with little or no taxes is expected to be curbed.

The Wall Street Journal evaluated this measure as the largest global tax regulation overhaul in 100 years, stating that countries worldwide will secure about $150 billion in additional annual tax revenue. CNBC also reported it as a groundbreaking deal.

Janet Yellen, the U.S. Treasury Secretary who actively promoted this agreement, welcomed it greatly.

Secretary Yellen described this agreement as a once-in-a-generation achievement in economic diplomacy. She said, "The introduction of a global minimum corporate tax rate is a victory for the United States and will provide a means to raise funds from corporations for (infrastructure investment)," and urged the U.S. Congress to take action to implement this agreement. The U.S. has planned to raise the corporate tax rate from the current 21% to 26.5% to secure tax revenue for infrastructure investment and has actively promoted the introduction of a global minimum corporate tax rate to prevent domestic companies from relocating abroad during this process.

According to this agreement, each country must amend its domestic tax laws and international treaties. There is an analysis that this process will not be easy.

The Wall Street Journal noted that although the OECD aims to implement the global minimum corporate tax rate in 2023, there is conflict between the ruling and opposition parties in the U.S. Congress, and it is expected to take considerable time before implementation.

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