G20 deal raises the minimum tax rate for big tech companies

Apple, Google and others couldn't use loopholes to avoid some taxes.

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ROME, ITALY - OCTOBER 30: U.S. President Joe Biden, Democratic Republic of Congo's President and African Union Chair Felix Tshisekedi, French President Emmanuel Macron, and Turkey's President Recep Tayyip Erdogan, from row from left, pose with other world leaders for a group photo at the La Nuvola conference center for the G20 summit on October 30, 2021 in Rome, Italy. The G20 (or Group of Twenty) is an intergovernmental forum comprising 19 countries plus the European Union.  It was founded in 1999 in response to several world economic crises. Italy currently holds the Presidency of the G20 and this year's summit will focus on three broad, interconnected pillars of action: People, Planet, Prosperity.  (Photo by Kirsty Wigglesworth - Pool/Getty Images)
Kirsty Wigglesworth - Pool/Getty Images

Large tech companies may soon have to pay significant taxes no matter what tax loopholes they had before. BBC News reports G20 leaders have reached an agreement that would set a global minimum tax rate of 15 percent for large companies. The long-in-the-making deal should be official as of today (October 31st) and would be enforced starting in 2023.

The US originally pitched the concept to prevent companies from using creative accounting (such as the "Double Irish arrangement") to avoid paying most of their taxes in the country. Other countries embraced the idea, though, and the Organization for Economic Co-operation and Development (OECD) told CBC News the move could rake in about $150 billion from corporations around the world.

The deal could discourage tech giants like Amazon, Apple, Google, Meta and Netflix from relying on loopholes to maximize their profits. If the deal collects the promised money, governments could better fund public services and help tackle problems like climate change. 

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There are numerous criticisms, however, and not just from those who generally oppose higher taxes. Oxfam, for instance, blasted "generous carve outs" that protected sone income and take 10 years to phase out. The pro-equality group also claimed the deal was "extremely limited" and would affect fewer than 100 companies while generating little money for poorer countries. The arrangement might beat the status quo for G20 nations, but it won't necessarily address some outstanding concerns.

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G20 deal raises the minimum tax rate for big tech companies