Treasury Secretary Janet Yellen said 130 countries now support a global minimum tax for corporations.
The news was announced in a Thursday press release, which said the 130 countries represent more than 90% of global gross domestic product. The agreement is a win for the Biden administration, which has been pushing for a global minimum tax of at least 15%.
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“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Yellen said in a statement.
Crucially, both China and India signed on to the move after previously expressing reservations about the plan. The rule will apply to corporations with revenues in excess of about $24 billion before eventually declining to those with revenues greater than about $12 billion.
The news comes after the Group of Seven’s wealthy nations committed to moving toward a 15% global minimum tax earlier this month.
The 15% rate is still higher than the corporate tax rate of some countries, including Ireland, which has a 12.5% rate. Hungary, which has a corporate income tax rate of only 9%, has already pushed back against the notion of a global minimum tax.
Companies operating in the U.S. pay a 21% corporate tax rate. President Joe Biden has proposed raising that rate to pay for an infrastructure deal, but Republicans have balked at that notion.
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The Organization for Economic Cooperation and Development, which has been negotiating the notion of a global minimum tax for years, hailed Thursday’s historic agreement.
“After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere,” said OECD Secretary-General Mathias Cormann.
