Towards a better globalization

The Secretary General of the OECD, Mathias Cormann.

GETTY

More information

• The main world economies reach a historic agreement to make multinationals pay more tax

A total of 130 governments - representing countries whose economies account for more than 90% of world GDP - have approved a plan to force multinational companies to pay a minimum income tax rate of 15%. The agreement comes after more than ten years of negotiations within the OECD aimed at guaranteeing a fairer international tax system, in which large companies with cross-border projection stop making use of jurisdictions of convenience and tax engineering strategies to avoid paying taxes. With the new system, multinationals will pay more and they will also do so in the countries where they generate their profits, something that has been violated, especially by large digital companies. Saving that minimum rate of 15%,Governments will continue to have the ability to set their tax rates, but now subject to multilateral surveillance.

The agreement will apply to large multinationals, initially with a turnover of more than 20,000 million dollars, to reduce them to 10,000 million after seven years. As in similar provisions, there are exceptions and adaptation periods for special companies or those belonging to sectors that are difficult to specify the fiscal location of their normal activities. As for the signatories, nine of the 139 who participated in the negotiation have refused the pact, including Ireland, Estonia and Hungary. The European Union must be consistent with this agreement and reduce the tolerance that it had up to now with some countries that were far from minimally acceptable codes of conduct.

But these limitations do not detract from the pact. The support achieved is vast, with the compromised adherence of the G-20, including the initially remiss China and India. The resources that the public finances of the countries will be able to recover, estimated by the OECD between 100,000 and 250,000 million dollars each year, are significant, especially in a period of difficulty for public finances such as the current one. The poor tax contribution of some large companies makes it difficult to invest in social services in many countries.

This coordination between governments is also particularly relevant at a time when trying to reinforce multilateralism damaged during the years of the previous US presidency. Governing globalization requires actions such as the one now approved in other areas such as trade, climate change or respect for labor rights. In addition, the decision is momentous because it means progress towards fair play and equal opportunities. The tax avoidance practiced by multinationals, with the active complicity of some governments that offer themselves as tax havens, generated unacceptable distortions, both in terms of competition and among taxpayers as a whole. Its definitive enlargement, with the probable backing of the G-20,In addition to repairing a serious factor of corrosion in the economic system, it will establish the dynamics of globalization on more stable bases, less vulnerable to political opposition.