Le Maire on OECD international taxation agreement

More than 130 countries agreed on Friday to sweeping changes on how big multinational companies are taxed in order to deter them from avoiding taxes by shifting their profits to nations with lower rates.

French finance minister, Bruno Le Maire made the announcement in a video address where he described the changes as a "tax revolution."

Under the agreement announced, countries would enact a minimum global corporate tax of 15% on the biggest companies, reaping an estimated $150 billion for government coffers once implemented.

U.S. President Joe Biden has been one of the driving forces behind the agreement as governments around the world seek to boost revenue following the COVID-19 pandemic.

The agreement among 136 countries was announced by the Paris-based Organization for Cooperation and Economic Development (OECD), which hosted the talks that led to it.

“This accord opens the way to a true tax revolution for the 21st century,” said Le Maire. "Finally the digital giants will pay their just share in taxes in the countries - including France - where they profit.”

The deal faces several hurdles before it can take effect.

U.S. approval of related tax legislation proposed by Biden will be key, especially since the U.S. is home to many of the biggest multinational companies.

A rejection by Congress would cast uncertainty over the entire project.

The deal is an attempt to address the ways globalization and digitalization have changed the world economy.

Alongside the minimum tax, it would allow countries to tax some of the earnings of companies whose activities, such as online retailing or web advertising, don't involve a physical presence.

The big U.S. tech companies like Google and Amazon have supported the OECD negotiations.

One reason is that countries would agree to withdraw individual digital services taxes they have imposed on them in return for the right to tax a part of their earnings under the global scheme.

That means the companies would deal with just the one international tax regime, not a multitude of different ones depending on the country.

On Thursday, Ireland announced that it would join the agreement, ditching a low-tax policy that has led companies like Google and Facebook to base their European operations there.

Although the Irish agreement was a step forward for the deal, developing countries have raised objections and Nigeria, Kenya, Pakistan and Sri Lanka have indicated they will not sign up.

The deal will be taken up by the Group of 20 finance ministers next week, and then by G-20 leaders for final approval at a summit in Rome at the end of October.