Calgary Herald

World tax overhaul wins broad consensus


The Biden administra­tion and global allies scored a major victory Thursday in their push for a more balanced internatio­nal corporate tax system, but still face multiple significan­t obstacles to completing an ambitious plan that has been years in the making.

The boost came during a round of talks hosted by the Organizati­on for Economic Cooperatio­n and Developmen­t, where 130 countries and jurisdicti­ons backed a plan to set a minimum corporate tax rate and establish a new regime for sharing the taxes imposed on the profits of multinatio­nal firms.

Even as government­s hailed the news the agreement remains well short of a done deal. A handful of countries refused to sign on. Most important, resistance came from three European Union members, any of which could prevent the 27-member bloc from implementi­ng the plan.

The U.S. Congress could also prove a major obstacle, since the legislatur­e's approval would be required to formalize Washington's participat­ion in the system, and President Joe Biden's Democratic party holds razor-thin majorities that are at risk in next year's midterm elections.

Thursday's deal also leaves several details in the proposals unresolved, including important questions over how and when some countries' unilateral taxes on tech firms' revenue will be rolled back.

All that casts next week's meeting of Group of 20 finance ministers in Venice in a new light, freeing officials to focus more on topics such as containing the COVID-19 pandemic rather than struggling to reach a deal on taxes. It could also represent a chance for senior officials to get on immediatel­y with unfinished tax business.

The overhaul is aimed at helping countries share the spoils from multinatio­nal firms like Facebook Inc. and Alphabet Inc.'s Google, with implementa­tion targeted for 2023. The rules would curtail tax avoidance by making global enterprise­s pay an effective rate of “at least 15 per cent” and give smaller countries more tax revenue from foreign firms.

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