Around136 countries including India agreed to enforce a global minimum corporate rate of 15%, as well a fairer system of taxing profits where they are earned.
- The Organisation for Economic Cooperation and Development (OECD), an intergovernmental organisation, has led talks on a minimum rate for a decade.
- It said the deal could bring in an extra $150bn of tax a year, bolstering economies as they recover from Covid-19.
- All 38 OECD member countries and the G20 group of the world’s most advanced economies would be part of the reforms. Four countries – Kenya, Nigeria, Pakistan and Sri Lanka – did not join the latest statement.
- Under the reforms, a new taxing right will be created enabling countries to levy a segment of the profits generated by the world’s biggest MNCs, based on the sales generated within each country’s borders.
- First Pillar: The OECD said that more than $125bn of corporate profits from about 100 of the world’s largest and most profitable multinational companies would be reallocated under the first pillar of the twin-pronged reforms.
- Second pillar: The second pillar will set a global minimum tax rate at 15% on large companies.
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