Leaders of the world’s 20 major economies have approved a global minimum corporate tax rate of at least 15 percent, which will come into force in 2023.
The tax is aimed at preventing multinational companies from taking advantage of complacent tax regimes and not paying taxes where they operate.
Janet Yellen, US treasury secretary, announced that leaders of the countries representing 80 percent of the world economy supported the reform at the Rome summit on Saturday.
“Today, every G20 head of state endorsed an historic agreement on new international tax rules, including a global minimum tax that will end the damaging race to the bottom on corporate taxation,” said Yellen.
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“It’s a critical moment for the US and the global economy.”
She offered congratulations to US President Joe Biden for the “achievement”.
Opening the summit, Mario Draghi, Italian prime minister, said the success of COVID-19 vaccines and efforts to stimulate economic recovery showed there is reason for optimism.
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“Together we are building a new economic model and the world will be all the better for it,” he said.
He described the tax deal as “a historic agreement for a fairer and more effective international tax system”.
“We call on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting to swiftly develop the model rules and multilateral instruments as agreed in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at (the) global level in 2023,” the draft conclusions, seen by Reuters, reads.
The conclusions are to be formally adopted on Sunday.
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President Vladimir Putin of Russia and President Xi Jinping of China are not attending the summit in person, but are taking part remotely.
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