At the end of October, ahead of COP26, world leaders agreed to a global tax agreement which means that profits of large businesses will be taxed by at least 15%. This initiative was agreed in Rome by all the leaders attending the G20 summit.
The plan sets a 15% minimum tax rate for companies with annual revenue above $865 million and would require a smaller group of the largest multinationals — those with annual turnover of $23 billion and profit margins above 10% to pay taxes in countries where they sell their products or services.
G-20 leaders committed to aim to implement the rules in 2023.
In the US, Congress will have to pass legislation for the global tax changes to take effect. Wealthy countries are to be the biggest beneficiaries of the deal, the Wall Street Journal reported, citing an analysis that the US will raise tax revenues 15 times that of China.
The deal is anticipated to bring in $150 billion per year globally, according to the Organisation for Economic Cooperation and Development. Governments around the world lose $245 billion every year in corporate tax to tax havens, according to the London-based Tax Justice Network advocacy group.
US Treasury Secretary Janet Yellen said the historic agreement was a "critical moment" for the global economy and will "end the damaging race to the bottom on corporate taxation".