An international agreement that would force the world’s largest multinationals to pay a fair share of taxes has been delayed until 2024 amid further disputes over the carefully negotiated agreement.
Mathias Cormann, Secretary-General of the Organization for Economic Co-operation and Development (OECD), told the World Economic Forum in Davos, Switzerland, that there were “difficult discussions” that meant the agreement could not enter in force in 2023, as previously expected.
Cormann said he was confident that an agreement would finally be put in place to allow countries to impose more taxes on the world’s largest companies based on sales generated within their borders.
But US billionaire investor David Rubenstein, co-chair of the Carlyle Group, said he doubted whether the OECD-negotiated deal would ever happen. “Global tax offers sound great, but implementing them is very difficult,” he said at a Davos session ahead of Cormann’s comments.
The deal, which Cormann called “historic and very important,” has two parts. Pillar 1 involves the reallocation of some profits from large multinationals such as U.S. technology companies to the countries where they made their sales, while Pillar 2 includes a minimum global corporate tax rate of 15%.
Cormann said “there are still some difficult discussions going on about the technical aspects” of Pillar 1.
“We deliberately set a very ambitious timetable for implementation to keep up the pressure and we believe this has helped keep the momentum going.
“But I suspect it’s probably very likely that we’ll end up with a practical implementation starting in 2024.”
Pillar 1 faces opposition in the U.S. Congress of Republican senators, and analysts have suggested the deal could fall if Democrats lose control of the House of Representatives in the November midterm elections. Rubenstein said he thought the deal would not happen even if Democrats retain control of the House.
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Cormann declined to comment on political issues, but said the OECD deal would be better for US multinationals than a proliferation of different tax regimes abroad if countries tried to make them pay individually. a fair part.
He was also “very encouraged by the progress” of Pillar 2 and hopes that EU members will agree to support it. Pillar 1 requires an international treaty to be agreed, while Pillar 2 is implemented through national law.
Cormann said that once there was a critical mass of countries imposing a minimum level of corporation tax on profits generated in their jurisdictions, it would be very difficult for other countries not to follow them.
He explained: “Essentially, you leave money on the table for other countries to raise, if you don’t align with that global standard.”
Poland has stalled its support for the EU directive to implement Pillar 2, but French Finance Minister Bruno Le Maire said on Tuesday it was confident an agreement would be reached.