On Friday, the German parliament sanctioned the adoption of a global minimum corporate tax, aligning with an international agreement aimed at ensuring that major corporations contribute a minimum tax rate of 15%. Under this arrangement, multinational companies are obligated to pay this specified tax rate on their worldwide profits, irrespective of the location where the profits are generated.
The initiative emerged in 2021 when nearly 140 countries reached a consensus within the Organisation for Economic Cooperation and Development (OECD) for a deal intended to be enforced from the following year. The primary objective is to prevent large corporations, such as Alphabet’s Google or Amazon, from evading taxes through the strategic transfer of profits to jurisdictions with lower tax rates, reports Hindustan Times.
This new taxation framework is applicable to all multinational companies and substantial domestic entities with an annual turnover exceeding 750 million euros ($800 million). The anticipated outcome of this measure is a global revenue increase of $220 billion, providing financial support to governments grappling with fiscal challenges post-COVID-19 and striving to navigate through a cost-of-living crisis. Despite the overarching objective, the ratification process has encountered obstacles in various countries.
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