The Organization for Economic Cooperation Development (OECD) announced Friday that 136 countries have agreed to a deal on a global minimum corporate tax of 15 percent.
The deal is a top priority for the Biden administration, which sees the international tax agreement as a way to prevent U.S. companies from becoming less competitive if lawmakers raise the U.S. corporate tax rate.
"This international agreement is proof that the rest of the world agrees that corporations can and should do more to ensure that we build back better," President BidenJoe Biden White House: US has donated 200 million COVID-19 vaccines around the world Police recommend charges against four over Sinema bathroom protest K Street revenues boom MORE said in a statement.
The minimum tax will apply to corporations with revenue exceeding 750 million euros. The OECD estimates that it will raise about $150 billion per year in additional global tax revenues.
The global tax deal also includes a portion focused on the issue of the location of where corporate profits are taxed.
Ahead of Friday's announcement, the deal gained momentum when Estonia, Hungary and Ireland announced that they would sign onto it. Those countries had not signed onto a statement about the international tax efforts in July.
Four countries that were involved in the OECD discussions — Kenya, Nigeria, Pakistan and Sri Lanka — have not yet signed onto the deal.
A Treasury official said Thursday that the goal is for the agreement to be finalized by the Group of 20 meetings in Rome at the end of the month.
Countries still need to implement the agreement, which could take some time. The OECD said that countries are aiming to have implantation effective in 2023.
“Today’s agreement will make our international tax arrangements fairer and work better,” OECD Secretary-General Mathias Cormann said in a news release. “This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalised and globalised world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform.
Treasury Secretary Janet YellenJanet Louise YellenOn The Money — Democrats eye tough choices as deadline looms Supply snarls, hiring issues hindered economy in September: Fed report Yellen sees stronger labor market after US shakes off 'shock' from delta MORE praised the agreement in a separate statement, calling it a “once-in-a-generation accomplishment for economic diplomacy.”
Yellen added that the deal paves the way for Congress to pass international tax reform proposals, which she hopes lawmakers do “swiftly” as part of a package that Democrats are pursuing through the budget-reconciliation process in order to prevent a Republican filibuster.
The top Republicans on Congress's tax committees, Rep. Kevin BradyKevin Patrick BradyDemocratic retirements could make a tough midterm year even worse Yellen confident of minimum global corporate tax passage in Congress 136 countries agree to deal on global minimum tax MORE (R-Texas) and Sen. Mike CrapoMichael (Mike) Dean CrapoDemocrats narrow scope of IRS proposal amid GOP attacks Senate GOP signals they'll help bail out Biden's Fed chair Yellen confident of minimum global corporate tax passage in Congress MORE (R-Idaho), criticized the deal, saying the Biden administration "used this global forum to advance its short-sighted domestic tax agenda."
— Updated at 3:27 p.m.