Big tech companies may soon have to pay big taxes, regardless of the tax loopholes they previously had. BBC News reports that G20 leaders have reached an agreement that would set a global minimum tax rate of 15% for large companies. The long-standing deal is expected to be official as of today (October 31) and will be in effect from 2023.
The United States initially pioneered the concept to prevent businesses from using creative accounting (such as the “Irish Double Arrangement”) to avoid paying most of their taxes in the country. However, other countries have embraced the idea and the Organization for Economic Co-operation and Development (OECD) said Radio-Canada News the move could bring in around $ 150 billion to companies around the world.
The deal could discourage tech giants like Amazon, Apple, Google, Meta and Netflix from relying on loopholes to maximize profits. If the deal rakes in the money it pledges, governments could better fund public services and help tackle issues like climate change.
There is a lot of criticism, however, and not just from those who generally oppose a tax hike. Oxfam, for example, lambasted the “generous exclusions” which protected certain incomes and took 10 years to disappear. The pro-equality group also claimed the deal was “extremely limited” and would affect fewer than 100 companies while generating little money for the poorest countries. The arrangement could beat the status quo for G20 countries, but it will not necessarily address some outstanding concerns.