Some 130 countries have agreed on a worldwide minimum tax, an idea backed by President Joe Biden. The minimum tax is part of an international effort to keep multinational companies from avoiding taxes by moving their profits to countries with low rates.
The agreement was announced last Thursday. It is an attempt to meet the difficulties of the interconnected and increasingly online world economy.
The deal calls for a world minimum tax of at least 15 percent. This is important for Biden as he seeks to raise more money for his American Jobs Plan. Technical details still need to be worked out. It would be at least 2023 before the agreement takes effect.
The agreement was announced by the Paris-based Organization for Economic Cooperation and Development. The agreement includes taxing part of the profits of the largest international companies in countries where they do business online, but may have no physical presence.