The 20 major countries and regional summits, collectively known as the G20, which opened in Rome, Italy on October 30, agreed to sign an agreement to set the world’s lowest tax rate for multinational corporations at 15% or more. This agreement mainly targets major Internet IT companies such as Google, Amazon, and Facebook, and these companies are avoiding tax payment, such as corporate tax, through tax-free countries or countries with easy tax rates or tax havens.
According to the 2015 OECD estimate of the Organization for Economic Cooperation and Development, it is reported that $100 billion to $240 billion of corporate tax was not received worldwide due to tax evasion by these companies. The G20 agreement was discussed under the leadership of the United States. The goal is to set the world’s lowest tax rate for large corporations at 15%, thereby eliminating companies from shifting their profits to tax avoidance. The OECD said the measure could raise $150 billion from companies worldwide.
The agreement will allow governments to allocate funds for public services or climate change and other issues if they are able to pay their due taxes. However, the agreed minimum tax rate of 15% is well below the corporate tax average of 23.5% in developed countries. In addition, fewer than 100 companies are affected. Some argue that it brings little money to poor countries.
In any case, if the G20 countries break the corporate tax evasion phenomenon, it can be a good thing for each country. Related information can be found here.