The European Union accepted a plan for a global minimum 15% tax on multinational corporations on Thursday, after months of bickering among leaders.
The historic agreement between almost 140 countries is designed to put an end to governments racing to slash taxes in order to attract the world’s wealthiest corporations to their territory.
“Today the European Union has taken a crucial step towards tax fairness and social justice,” EU economy commissioner Paolo Gentiloni said.
“Minimum taxation is key to addressing the challenges a globalized economy creates.”
The strategy was developed under the Organization for Economic Cooperation and Development’s supervision and already had the support of Washington and many key EU economies.
However, the introduction of the minimum tax across the 27-nation European Union has already been postponed due to protests or delaying tactics by member states.
Poland recently prevented official passage of the measure while fighting over other issues such as penalties against Russia.
However, during Thursday’s meeting, such reservations were overcome, and the tax will now be implemented across the board by the end of next year.
The move was lauded by leaders.
Germany’s Chancellor Olaf Scholz said called it a “project close to my heart” and France’s President Emmanuel Macron said France had been pushing the idea for more than four years.
The global minimum tax is merely one component of the OECD accord, known as Pillar Two.
The first pillar, which requires corporations to tax where they produce their income in order to reduce tax avoidance, particularly targets digital behemoths.
It necessitates an international agreement, which has yet to be finalized.
Source – ET