Oct. 8 (UPI) — A global treaty to impose a minimum global tax rate of 15% on large multinational companies took a step closer to approval Friday when Hungary joined Ireland and Estonia in dropping opposition to the agreement.
A deal is expected to be announced Friday at a meeting overseen by the Paris-based Organization for Economic Cooperation and Development.
The treaty involves more than 130 nations and would be the most substantial overhaul to the global tax system in a century. The new tax system could begin in 2023.
Finance officials from the Group of 20 major economies announced their approval of the plan in July and the OECD has been pushing for an agreement for about a decade.
Ireland agreed to drop its opposition to the treaty after language was revised to remove a stipulation that minimum tax rates should be “at least 15%.”
“We have secured the removal of ‘at least’ in the text,” Irish Finance Minster Paschal Donohoe said, according to CNN. “This will provide the critical certainty for government and industry and will provide the long-term stability and certainty to business in the context of investment decisions.”
The change allows smaller Irish companies with less than $867 million in annual revenue to continue paying a corporate tax rate of 12.5%. That reduced rate lured many companies like Facebook, Apple and Google to headquarter their European operations in Ireland.
The 15% rate would apply to more than 1,500 Ireland-based multinational companies.
Hungary, which has attracted investment with a 9% corporate tax rate, agreed to join the deal after securing an exemption that would allow multinational companies to reduce profits subject to the tax over a period of 10 years.
“It’s a once-in-a-generation opportunity to make the international tax system fairer,” U.S. Secretary of State Anthony Blinken said in a statement this week.
OECD Secretary-General Mathias Cormann said he’s “quietly optimistic” that an agreement will be finalized before the G20 Leaders’ Summit in Rome on Oct. 30.