Nearly 140 countries have taken a first step towards an international agreement guaranteeing a “fairer distribution” between states of tax revenues from the profits of multinationals, the OECD announced on Wednesday.
The 138 states meeting Monday and Tuesday in Paris under the aegis of the Organization for Economic Co-operation and Development (OECD) agreed on a first draft multilateral convention on Tuesday. However, several sticking points will still have to be resolved before arriving at the final version of the text, which each state will then have to ratify.
Until now, the biggest multinationals, in particular the giants of the web, could choose to be taxed in countries with favorable taxation where they nevertheless exercised only a small part of their activity. Since 2017, the OECD has been coordinating international negotiations aimed at ensuring each country tax revenue that is better proportioned to the real activity of multinationals on their territory.
With the draft agreement announced Tuesday, the OECD claims to have taken a historic step in its two-pronged reform of the international tax system.
In October 2021, common ground was found on the creation of a global minimum tax of 15% on the profits of multinationals, pillar two of the OECD reform, in the process of being applied by around fifty of states. But for several months, the negotiations stumbled on the pillar one, supposed to put an end to the tax optimization of the gloves of the world economy.
This step reflects the significant progress made, but there are still important issues to be resolved, in particular to protect American companies from discriminatory taxes on digital services and other unilateral measures, said Lily Batchelder, in charge of tax policy at the United States Treasury, in a press release
According to the OECD, the global minimum corporate tax is expected to generate $220 billion in additional tax revenue each year. If pillar one of the reform is adopted, an additional amount of between 13 and 36 billion dollars is expected.
Qualifying the advance concluded on Tuesday as excellent news, the French Minister of Economy and Finance Bruno Le Maire recalled in a message to the press that it was a fight of more than six years for the big multinationals pay their fair share of taxes.
The text implementing pillar 1 is now ready to be signed, said Mr. Le Maire.
I call on all states to redouble their efforts to find a compromise on the latest political issues to be discussed, he added, particularly during the meeting of G20 finance ministers scheduled in India from July 14 to 18.