Sign In
Learn bits
Economy
Pradeep Kumar

10/10/21 10:00 AM IST

Global pact made on minimum corporate tax

In news

136 countries agreed to enforce a corporate tax rate of at least 15%, as well a fairer system of taxing profits where they are earned.

Aim

The deal aims to end a four-decade-long “race to the bottom” by governments that have sought to attract investment and jobs by taxing multinational companies only lightly and allowing them to shop around for low tax rates.

Why this agreement?

The new digital era giants have become adept at simply moving profits around, from the regions where they do business to those where they will pay the lowest taxes. Good news for tax havens, bad news for everyone else.

Significance

Countries will also have more scope to tax multinational companies operating within their borders, even if they don't have a physical presence there.

Opposition
  • Ireland, Hungary and Estonia - all of which have corporate tax rates below 15% - at first resisted the plan but are now on board.
  • Ireland currently has a rate of 12.5%, which has helped it attract large amounts of foreign investment and become a base for big US firms such as Apple.
  • Kenya, Nigeria, Pakistan and Sri Lanka have not yet signed up to the plan.
Source: The Hindu

More Related Current Affairs View All

05 Mar

First-ever comprehensive survey of India’s river dolphins

'Prime Minister Narendra Modi released the results of the first-ever comprehensive population estimation of riverine dolphins – Gangetic and Indus dolphins – done in In

Read More

05 Mar

Arresting women at night

'The Madurai Bench of the Madras High Court in Deepa versus S. Vijayalakshmi and Others ruled that the legal provision in the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which

Read More

05 Mar

Digital Personal Data Protection Act, 2023

'The Ministry of Electronics and Information Technology (MeitY) looking to wrap up public consultations on the draft Rules for the Digital Personal Data Protection Act, 2023 by Mar

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps