Nearly 140 countries reach deal on corporate minimum tax

Paschal Donohoe welcomed the deal saying it "demonstrates the importance of working together to achieve positive outcomes for the world". Picture: Julien Behal

Nearly 140 countries have agreed on a tentative deal that would make sweeping changes to how big multinational companies are taxed to deter them from stashing profits in offshore havens where they pay little or no tax.

The agreement announced on Friday foresees countries enacting a global minimum corporate tax of 15% on the biggest, internationally active companies.

US 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.

[NEWS] International community strikes a ground-breaking tax deal for the digital age.

🗞️ Read more ➡️ https://t.co/Qxz8oizuUW#BEPS #digitaltax #OECD #G20Italy pic.twitter.com/hHMMeWfD9u

— OECD Tax (@OECDtax) October 8, 2021

The agreement was announced by the Paris-based Organisation for Co-operation and Economic Development, which hosted the talks.

The OECD deal is an attempt to deal with the ways in which globalisation and digitalisation have changed the world’s economy.

Alongside the global minimum tax, the deal would let countries tax part of the earnings of companies whose activities do not involve a physical presence, such as internet retailing or web advertising.

The Minister for Finance Paschal Donohoe welcomed the deal saying it "demonstrates the importance of working together to achieve positive outcomes for the world".

"This landmark agreement will address global tax challenges of digitalisation and provide the certainty and stability that large business and Government need."

The Government announced on Thursday that it was signing up to the deal that will see Ireland's corporation tax jump to 15%.

The tax rate will apply for all multinationals with revenues in excess of €750m. The 12.5% rate will remain for businesses with revenues below the €750m mark.