Prez Macron hails 'historic' global tax deal; calls it ‘major step’ in fiscal justice

French President Emmanuel Macron on Saturday welcomed the "historic" global tax agreement that opened gates to a fairer system of taxing profits. The agreement, which is to enforce a 15% corporate tax rate on MNEs, was signed by 136 countries in at the Organisation for Economic Cooperation and Development (OECD) in the presence of US Secretary of State Antony Blinken.

The 'landmark' deal was welcomed by President Macron who took to Twitter to express his satisfaction over the reformed international tax system. "For four years, we have been working for a fair taxation of multinational and digital giants," he wrote. "The tax agreement reached the OECD is historic... It is a major step forward for tax justice," Macron added.

'Two-Pillar' solution to address int'l tax disparities

The deal finalised by the OECD will be effective from fiscal year (FY) 2023, under which Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate, the OECD said through a press release. "The new minimum tax rate will apply to companies with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually," OECD explained. The deal updates and finalises a July political agreement by members of the Inclusive Framework to fundamentally reform international tax rules. Countries are aiming to sign the 'far-reaching, balanced' multilateral reform during a convention in 2022, with effective implementation in 2023, OECD Secretary-General Mathias Cormann said in a statement.

"The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits," the statement added.

As per OECD, the reformations do not seek to "eliminate" tax competition, instead put multilaterally agreed limitations on it. The reforms will allow countries to collect around USD 150 billion in new revenues annually. The deal was welcomed by the EU, Estonia, Hungary and Ireland and all other G20 countries.

Image: AP