The head of an organization representing some of the world’s richest countries says a new global tax deal represents an ambitious but pragmatic approach to making multinational corporations pay their fair share, defending against criticisms that it does not go far enough.
“In the end, people will have their views, but this is a massive and historically significant reform which will make our international tax arrangements fairer and work better in a digitalized and globalized world economy,” Mathias Cormann, secretary general of the Organization for Economic Co-operation and Development, said in an interview Sunday on Rosemary Barton Live.
Member nations of the Group of 20 backed the global tax deal at a summit in Rome on Sunday. The deal, which was agreed to in principle by 136 countries earlier this month, includes changes to allow countries to tax profits of multinational companies even when those companies have no physical presence in their countries, as well as a minimum corporate tax rate of 15 per cent.
But the deal has been criticized, in Canada and elsewhere, for not going far enough to rein in multinational corporations. Oxfam International called the deal a “mockery of fairness,” because of exceptions that can shield some income and are phased out over a 10-year period.
Cormann pushed back against those criticisms Sunday, saying while the world needed to be “ambitious, but you’ve also got to be pragmatic.”
“You know, we could have aimed for this, that and whatever and not have had an outcome,” Cormann told CBC chief political correspondent Rosemary Barton.
“Nobody’s helped by having conversations going on for another 10 years that ultimately don’t lead to an outcome.”
Group targeting 2023 implementation
Cormann said the deal would reallocate the right to tax about $125 billion US in profits, while the minimum corporate tax is expected to bring in $150 billion US from multinational corporations.
Finance Minister Chrystia Freeland, who pushed strongly for the agreement, told CBC’s The House earlier in October that, based on a preliminary analysis, the federal government expected Canada would get about $4.5 billion in additional revenue if the deal went into place.
Cormann is facing a tight timeline to implement the two pillars of the global agreement. He said he is looking to have the details finalized by next March so that it can go into effect in 2023.
The minimum corporate tax deal must be implemented by individual legislation in each signatory country, but Cormann said his group was working on model legislation with a goal of having that available next month and the pillar in place in 2023 as well.
The deal is expected to face some resistance in the United States, where Republican senators could slow or stop changes to tax treaties required to implement the deal. American tech companies like Google and Facebook are some of those corporations targeted by the deal.
You can watch full episodes of Rosemary Barton Live on CBC Gem, the CBC’s streaming service.