Last week nearly 140 countries took another step towards a global tax deal that will limit the scope for big companies to dodge taxes by shifting their profits overseas.
There were some very small positive last-minute changes to the deal, which the OECD believe will raise up to £130bn globally by preventing big companies from avoiding tax.
The deal will be a landmark in the struggle for tax justice, by reigning in the largest multinationals who have for too long been able to exploit the rules to unfair advantage.
But it is not a silver bullet.
First the global minimum corporate tax rate will be too low. At 15% it will not be sufficient disincentive to prevent profit-shifting out of the UK, where the headline corporation tax rate is going up to 25%. It will not create a level-playing field for domestic businesses.
Second, despite some small improvements to the deal, the overwhelming benefit will go to the G7 countries who have led the process. The US will be the major winner. A lot more could be done to split the extra tax raised fairly across the world. Countries in the Global South should have more power over the setting of global tax rules.
Finally, it’s not clear that the deal will be better at taxing the biggest technology firms than individual digital taxes already in place in some countries - such as the UK’s digital services tax. Letting the tech giants off the hook would be a catastrophe.
We have come a long way to get to a deal, but clearly there is more work to be done. Once the dust has settled on the details though, this agreement could be the first of many, each of which take us a step closer to global tax justice.
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