Finance ministers from the Group of 20 (G20) major economies endorsed on Sunday an agreement to revamp international corporate taxation, raising concerns of developing countries.
The approval by G20 world leaders came after the Paris-based Organization for Economic Cooperation and Development (OECD) announced ealier in October that a major reform of the international tax system had been agreed on by 136 countries and jurisdictions, representing more than 90 percent of global gross domestic product (GDP).
The agreement to impose a minimum corporate tax rate will subject multinational companies to a minimum 15-percent tax rate from 2023. The revamped tax rules will apply to multinational companies with revenue above 750 million euros (about 866.73 million U.S. dollars).
Under the agreement, countries where multinational companies are headquartered will be able to collect the tax deficit if the companies pay a tax rate lower than 15 percent in its overseas market.
The global corporate minimum tax rate will benefit developed countries, where most of the largest multinational companies are headquartered, more than developing countries, according to a report by the EU Tax Observatory, an independent research laboratory hosted at the Paris School of Economics.
Under the new tax scheme, the EU will increase its corporate income tax revenue by more than 80 billion euros (92. 45 billion dollars) a year, while the United States will gain 57 billion euros (about 65.87 billion dollars) a year, said the report released in October.