Global tax overhaul backed by 130 countries

Officials from 130 countries have agreed to overhaul the global tax system to ensure big companies "pay a fair share" wherever they operate.

The Organisation for Economic Co-operation and Development (OECD) said on Thursday that negotiators had backed a proposed minimum corporate tax rate of at least 15%.

US Treasury Secretary Janet Yellen said: "Today is an historic day for economic diplomacy."

Tax on big tech firms has been a source of friction between the US and others.

The OECD, which led the talks, said that the plans could generate about $150bn (£109bn) in tax revenues a year.

But the Paris-based organisation confirmed that Ireland and Hungary - countries with low corporate taxes - had not joined the deal on the global minimum.

All G20 countries, such as the US, UK China and France, did back the agreement.

Participating governments are now expected to try to pass relevant laws to bring in the minimum, although details such as possible exemptions for certain industries are still up for negotiation.

"A detailed implementation plan together with remaining issues will be finalised by October 2021," said a statement signed by 130 out of 139 countries and jurisdictions involved in the talks.

Countries have also signed up to new rules on where the biggest multinational companies are taxed. They would see taxing rights on more than $100bn of profits shift to countries where profits are generated, rather than where a business might have its headquarters.

'No nation has won this race'

The US Treasury Secretary, Janet Yellen, said the agreement sent a sign that a "race to the bottom" on tax rates was coming to an end.

"For decades, the US has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response.

"The result was a global race to the bottom: Who could lower their corporate rate further and faster?"

She said that "no nation" had won the race.

The Biden administration has been pushing for a deal internationally while it seeks to raise taxes domestically. It has, for example, called for an increase in the US corporate tax rate from 21% to 28%.