In a strategic economic move aimed at enhancing international financial stability, more than 145 countries and jurisdictions have agreed to make substantial changes to the Global Minimum Corporate Tax Agreement, which was first reached in 2021. This move comes in response to serious concerns raised by the United States of America, to ensure that multinational companies are not harmed by the current regulatory rules.
Details of the amendments and the American position
The OECD explained that the revised package maintains the core principle of the agreement: a 15% global minimum tax rate to ensure that large companies contribute their fair share of taxes in the countries where they operate. The new amendments include procedural simplifications and specific exceptions (safe harbors) aimed directly at aligning US minimum tax laws with international standards.
This international flexibility comes in response to previous objections from the administration of US President Donald Trump, who issued an executive order after taking office, indicating that the agreement in its previous form did not have binding legal force within the United States, which necessitated renegotiation to protect American competitiveness.
Historical background: The end of the "race to the bottom"
The 2021 agreement is considered a historic achievement, the culmination of years of arduous negotiations led by the G20 and the OECD. Its primary objective was to put an end to the so-called "race to the bottom," where countries competed to lower taxes to attract foreign investment, eroding tax bases and depriving governments of essential revenue to fund public services.
The new global tax system was designed to meet the challenges of the digital economy and ensure that technology giants and large corporations pay taxes where profits are made, not just at their headquarters, which are often in low-cost tax havens.
Expected economic impact
This revised harmonization is expected to contribute to a more stable and transparent investment environment for multinational companies. By aligning U.S. rules (such as the GILTI system) with global regulations, it avoids the risks of double taxation and trade disputes that were looming. This agreement is also expected to boost global tax revenues by an estimated billions of dollars annually, supporting national economies in the face of current global financial challenges.
