The Chancellor, Rishi Sunak has hailed global cooperation after 136 countries agreed a new system ensuring large multi-nationals pay the right tax in the right places.
The historic reforms, agreed in principle by the G7 at talks chaired by the Chancellor, will mean multinationals pay their fair share of tax in the countries they do business (Pillar One), along with a minimum 15% corporation tax rate in each country they operate in (Pillar Two).
The aim is for these historic rules to be implemented and effective from 2023.
Rishi Sunak said:
The UK has taken an active role in the push for an international solution to the challenge of taxing technology multi-nationals for nearly a decade – with the Chancellor making securing a global agreement a key priority of the UK’s G7 Presidency.
The deal struck today means that firms with at least a 10% profit margin will see 25% of any profit above the 10% profit margin reallocated and then subjected to tax in the countries they operate. Previously countries had only agreed to reallocating “between 20% and 30%”.
The principles of the agreement were agreed at OECD-level this summer and the UK will continue discussions with its global partners over the coming months as it looks towards beginning the implementation process.
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