The goal was to force technology giants like Amazon and Google to pay more taxes to countries based on where their goods or services are sold, regardless of whether they maintain a physical presence there. But the consensus behind the agreement appears to be eroding.
It has now been over two years since G7 leaders announced a groundbreaking agreement to divvy up taxation of multinational corporations’ profits. That breakthrough followed years of fraught negotiations under the aegis of the OECD/G20 Inclusive Framework, which then adopted the same agreement later that year.
By establishing a 15% global minimum tax rate that companies would have to pay wherever they operate, the agreement aimed both to deter profit-shifting through tax havens and to limit beggar-thy-neighbor policies for attracting foreign investment. It also introduced an additional tax on “around 100 of the world’s largest and most profitable multinationals to countries worldwide, ensuring that these [firms] pay a fair share of tax wherever they operate and generate profits.”
