The EU imposes a global minimum tax of 15% on multinational corporations.
(AFP) – After months of fighting, the leaders of the European Union finally agreed on a plan for a global minimum tax of 15% on multinational companies on Thursday. The historic agreement between almost 140 countries is meant to stop governments from trying to be the first to cut taxes to get the world’s biggest companies to move there.
“Today, the European Union took a big step toward tax fairness and social justice,” said Paolo Gentiloni, the EU’s commissioner for the economy.
“The key to dealing with the problems that a globalised economy brings is to have as few taxes as possible.”
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The plan was made with the help of the Organization for Economic Cooperation and Development. It was already supported by Washington and a number of major EU economies.
But the 27 countries that make up the European Union have already slowed down the implementation of the minimum tax by objecting to it or trying to stop it.
Most recently, Poland stopped the formal adoption of the measure this week while arguing about other things, like sanctions against Russia.
But at Thursday’s summit, these worries were talked out of the way, and the tax will now go into effect at the end of next year for the whole block.
Leaders were happy with the choice.
Germany’s Chancellor Olaf Scholz said it was a “project close to my heart,” and France’s President Emmanuel Macron said France had been pushing for the idea for more than four years.
The global minimum tax is only one part of the OECD agreement. It is called “Pillar Two.”
The digital giants are the main focus of the first pillar, which says that companies should be taxed where they make their money to stop tax evasion.
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It needs an international deal that hasn’t been made yet.