Global Minimum Corporate Tax Deferred

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A new international tax agreement due to come into force next year has been delayed.

An agreement to tie multinational corporations to a global minimum tax rate is unlikely to come into effect before 2024, according to the secretary-general of the Organization for Economic Co-operation and Development (OECD). Mathias Cormantold the World Economic Forum (WEF) as reported by the British newspaper “The Guardian.”

Resistance from the United States and Poland is cited as the reason for the delay in progressing the deal.

The treaty consists of two pillars. The first provides that multinationals whose worldwide annual turnover is greater than 20 billion euros (21 billion dollars) and profitability greater than 10% pay taxes in the countries where the sales are made. The second pillar fixes the tax on companies whose annual turnover is greater than 750 million euros with a minimum rate of 15%.

Corporation tax

Switzerland, traditionally considered a low-tax jurisdiction, is in the process of reviewing its corporate taxes. Last year the Federal Council decided to implement the minimum tax rate agreed by OECD and G20 member states through a constitutional amendment.

Under the new rules, cantons can continue to offer business incentives as they have done in the past, but if the tax breaks bring a company’s tax burden below the minimum level, taxes can be increased to deal with it.

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