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| Tech companies will not be able to evade taxes |
Tech companies may soon have to pay huge taxes, no matter their tax loopholes, as leaders of the world's 20 largest economies agree to a global deal to tax profits of multinationals at at least 15%.
The BBC reports that G20 leaders have agreed to set the minimum global tax rate for large companies at 15%.
The deal was approved in principle by 136 countries earlier this month, including allowing states to tax the profits of multinational corporations even if those corporations do not have a physical presence in their country and a lower corporate tax rate of 15%.
The long-term agreement proposed by the United States is due to enter into force yesterday (October 31) and will be implemented in 2023.
The deal was closed due to concerns about the redistribution of profits by multinational companies through low-tax countries.
This concept was originally proposed by the United States to prevent companies from using creative bookkeeping (such as Irish double agreements) to avoid most taxes in the country.
Other countries have also adopted this idea. According to the Organization for Economic Co-operation and Development, the move could generate sales of about $150 billion for global companies.
The deal could prevent tech giants like Amazon, Apple, Google, Meta and Netflix from relying on loopholes to maximize their profits.
If this deal increases the funds allocated, the government can better fund public services and help address issues such as climate change.
Raising the minimum tax rate for big tech companies
However, in addition to those who are generally against tax increases, there are many points of criticism. In fact, the deal does not control multinational companies.
Oxfam called the deal a sham of justice. She said there are exemptions for certain income protection and that they will expire in 10 years.
Equality organizations also claimed that the deal was too limited and affected fewer than 100 companies. Even if it brings little money to poor countries. This agreement could break the status quo of the G20 countries. But this will not necessarily solve some of the open problems.
In the US, the deal is expected to meet resistance. Senators can slow or stop tax treaty changes required to implement the treaty.