President Biden celebrated Friday as 136 countries agreed to set up a global minimum corporate tax rate of 15%, to be imposed by 2023.
The Organization of Economic Coordination and Development (OECD), which has been leading the negotiations, said that that 136 of 140 nations had agreed to crack down on tax havens and in addition to the new global minimum.
'Today's agreement shows how American leadership and diplomacy is advancing the economic interests of American working families,' Biden said.
'For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for shipping jobs and profits overseas. This race to the bottom hasn't just harmed American workers, it's put many of our allies at a competitive disadvantage as well.'
Four member countries – Kenya, Nigeria, Pakistan and Sri Lanka, did not agree to the plan.
'Today's agreement shows how American leadership and diplomacy is advancing the economic interests of American working families,' President Biden said
Rich nations have struggled for years to agree how best to raise more cash from tech giants such as Google, Amazon and Facebook.
Biden had been pushing for the international agreement as he moves to hike the US rate from 21 percent to 28 percent. The US had hoped to secure a higher 21 percent global minimum rate.
Under the agreement, tech giants like Amazon and Facebook would also be required to pay taxes in countries where their goods or services were sold, even if they have no physical presence there.
Rich nations have struggled for years to agree how best to raise more cash from tech giants such as Google, Amazon and Facebook.
The Biden administration feared that raising corporate taxes to fund its huge program of public spending would drive them overseas.
In remarks before the agreement was announced, Treasury Sec. Janet Yellen said: 'the international tax agreement will stop the four-decade long race to the bottom on corporate taxation — where tax authorities offer lower tax rates to attract business, leading others to respond with lower rates.'
The agreement is slated to be finalized next week at a meeting of finance ministers of the G-20, the 20 largest global economies, in Washington. National leaders are expected to sign it in Rome at the end of October.
Still, Congress would have to agree to the deal - it would have to pass legislation that raising the tax that American companies pay on foreign profits to at least 15%, from 10.5%.
Democrats have planned to pass the increase through budget reconciliation, a process to bypass the filibuster and pass bills by simple majority.
Republicans have pushed back on that, as senators warned Friday that the administration's negotiations “undermine the Senate’s constitutional authority, as well as the United States’ role as a reliable trading partner,' according to the New York Times.
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