G20 Finance Ministers Support Minimum Global Corporate Tax For Multinational Companies

The finance ministries of the twenty major economies in the world have approved the minimum corporate tax for the largest corporations, regardless of their country of registration. This will not allow multinational companies, primarily technology companies such as Facebook, Google, or Amazon, to reduce costs by registering their headquarters in countries with low taxes.

The signed agreement implies that corporations will pay taxes in the countries where they sell their services, and sets a minimum corporate tax at a rate of at least 15%. The implementation of the project will begin after approval by the leaders of the G20 countries at the summit in Rome, which will be held in October.

German Federal Minister of Finance Olaf Scholz called the agreement an important historical moment. He also hoped that low-tax countries such as Ireland, Hungary, and Estonia, which opposed the declaration, would still agree with him.

In May, the US Treasury came up with a proposal to set the minimum corporate income tax rate for transnational corporations at 15%. In June, the G7 countries approved the US proposal, agreeing that it should be at least 15%.

According to the Organization for Economic Co-operation and Development (OECD), which is involved in negotiations with the G20, 130 countries joined the global tax reform project, which includes a minimum 15% tax rate, in early July.

There is still a lot to be done, but the US and European countries are on the way to a tax regime that is fair for all citizens and countries.