(FRANKFURT/Germany) A global minimum tax has been supported by 130 countries as part of an international effort to prevent multinational companies from shifting profits to low-rate countries.The Organization for Economic Cooperation and Development announced Thursday that it would tax the biggest global companies located in countries where they make profits from online businesses, but have no physical presence.Following a proposal by Joe Biden, the U.S. President for at least 15% interest rates, the negotiations moved closer to a deadline of the middle year. The Group of 20 countries will discuss the deal at their meetings later in the year. They hope to finish the details by October and implement the agreement in 2023.The deal allows countries to tax foreign earnings of their companies if they are not taxed through subsidiaries located in other countries. This would eliminate the incentive to use legal and accounting schemes to transfer profits to low-rate nations, as the profits would still be subject to tax at home.The deal was not signed by all 139 countries who joined the negotiations. Extraction companies, such as oil and mining, and regulated banks, were not exempted from the proposal to tax countries that have sales but no physical presence.Now, the deal needs more technical work and will be reviewed by the Group of Twenty countries. These 20 countries account for around 80% of the world's economy. The meeting of G-20 finance ministers will be held in Venice next week. In October, the full G-20 summit of leaders from all countries will take place. Countries would need to sign up to a multilateral agreement to tax companies that have no physical presence but generate revenue.Biden proposed that the US set a minimum 21% rate for overseas earnings for large US companies in order to discourage them from shifting their profits to tax havens. The US tax proposal of Biden must be approved by Congress. This is where the Democratic president only has a small majority.The Leadership Brief. Conversations with the most powerful leaders in tech and business. Enter valid email address. * Your request was unsuccessful and time expired. Please sign up again. Sign up now! An error occurred during your registration. Please try again later. If you don't wish to receive promotional emails from TIME, please check the box. You may unsubscribe at anytime. Signing up means you agree to our Terms of Service and Privacy Policies. This site is protected by reCAPTCHA. The Google Privacy Policy, Terms of Service and Terms of Service also apply. We are grateful! We have sent you a confirmation email for your security. To confirm your subscription, click the link and you will start receiving our newsletters. Please check your spam folder if you do not receive the confirmation in 10 minutes.Write to us at letters@time.com
