OECD: 136 Countries Create Global Minimum Tax For Multinationals

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OECD: On Friday (8), the Organization for Economic Cooperation and Development (OECD) announced a historic agreement between 136 countries, which is being called the greatest corporate tax reform of the century. In addition to forcing the world’s largest companies to pay a minimum tax rate of 15%, the pact also establishes new rules to force these multinationals to clearly declare their profits.

The expectation of the OECD is that the signed commitment can end once and for all the constant conflicts between countries that entered into “tax wars” and also tax havens, guaranteeing everyone a global revenue that could reach US$ 150 billion, the equivalent of R$ 828 billion per year, based on sales generated within the borders of each country.

Of the 140 nations participating in the negotiations, only four – Kenya, Nigeria, Pakistan and Sri Lanka – did not adhere to the last approved declaration. Brazil, along with China, was also very reluctant to sign, according to the Financial Times. India only agreed to the deal at the last moment.

How will the new tax agreement work?

The agreement signed at the OECD headquarters in Paris was conceived on two pillars. The first of them does not establish a new tax collection, but the reallocation of “some tax collection rights on multinationals, from their countries of origin to the markets where they operate and make profits, regardless of whether the companies have a physical presence there”. According to the organization, these amounts may exceed US$ 125 billion (R$ 690 billion)

Pillar one will apply to companies with worldwide sales volumes above €20 billion (R$128 billion). On the other hand, pillar two of the agreement, the one that establishes the minimum tax of 15%, will reach all organizations “with revenues in excess of €750 million [BRL 4.8 billion]“.

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