EXPLAINER: How global deal stems corporate use of tax havens
ABC News
Complex global talks have forged a deal on sweeping changes in how multinational companies are taxed
FRANKFURT, Germany -- More than 130 countries have forged a deal on sweeping changes in how big global companies are taxed.
The goal: deterring multinational companies from stashing profits in countries where they pay little or now taxes — better known as tax havens.
The sweeping agreement was struck Friday among 136 countries after talks overseen by the Organization for Economic Cooperation and Development. It would update a century's worth of international taxation rules to cope with changes brought by digitalization and globalization.
The most important feature: a global minimum tax of at least 15%, a key initiative pushed by U.S. President Joe Biden and Treasury Secretary Janet Yellen. Yellen said the minimum tax will end a decadeslong “race to the bottom” that has seen corporate tax rates fall as tax havens sought to attract corporations that take advantage of low rates — but do little actual business in those locations.
