Ending the race to the bottom – historic global tax reform

For years, multinationals have frustrated world governments with the innovative ways they’ve avoided hefty tax bills. But in October 2021, the G20 – comprising 19 countries and the European Union – formally agreed to impose a new global minimum corporate tax rate of 15 per cent. US Treasury Secretary Janet Yellen declared that this ‘historic agreement’ will ‘end the damaging race to the bottom on corporation taxation’.

The G20 countries are now taking steps to implement the proposals into law. On 20 July for example, the UK government published a policy paper on a measure to help ensure multinational enterprises operating within the UK pay a global minimum level of tax.

Criticisms of the plans remain, however; for example, some commentators call for a higher rate of tax than is currently put forward. Discussing the agreement and the issues still to be addressed are:

• John Christensen, a member of the governing board of Tax Inspectors Without Borders;
• José Antonio Ocampo, Chair of the Independent Commission for the Reform of International Corporate Taxation and former Executive Secretary of the UN’s Economic Commission for Latin America and the Caribbean; and
• Professor Mark Pieth, Professor of Criminal Law at the University of Basel and former Chair of the OECD Working Group on Bribery.

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