OECD: US approach on tax deal a 'game changer'

The landmark international tax deal that won support Saturday at the Group of 20 summit will make international business taxation more fair and help governments fund their recoveries from the pandemic, the head of the international organization that oversaw the negotiations told AP.

Mathias Cormann, the secretary-general of the Organization for Economic Cooperation and Development (OECD), said that the deal will make the international tax arrangements fairer and that the "largest and more successful multinationals around the world now have to pay their fair share of tax in the markets in which they operate and generate".

The Paris-based OECD oversaw talks that led to an agreement among 136 countries that is being presented to the G-20 for approval, to be followed by enactment at the national level from 2023.

The deal calls for countries where multinationals are headquartered to enact a global corporate minimum tax of 15%.

If their companies' foreign earnings go untaxed or lightly taxed in low-rate countries, the home countries would collect a top-up tax to the minimum.

That aims to stop companies that earn profits from easily moved assets such as copyrights and trademarks from shifting their profits to low-rate tax havens through often complex accounting schemes.

The global minimum "completely eliminates the incentive for businesses around the world to restructure their affairs to avoid tax."

Cormann disagreed with criticism from tax justice advocates and some developing countries that the rate should have been higher, saying the deal was the consensus result of "give and take all the way around" that included developing countries.

"In the end people can say the rate should be higher and this should be different but 80% of something is always better than 100% of nothing" Cormann said.