Key step in global tax reform

Before the G20 meeting, the OECD reached a broad agreement with 130 countries and territories to set minimum corporate tax rates and how to share taxing powers on multinational companies such as Facebook and Google. The world moved towards a sharper reforming in the global tax program.

The new tax rules could be implemented as early as 2023 to reduce tax evasion by letting multinationals pay an effective tax rate of "no less than 15%", while smaller countries would be able to collect more tax from foreign companies. The agreement also stipulates that companies with revenues of more than 20 billion euros ($24 billion) will be subject to new taxation rules where they are taxed. As a concession to smaller economies, the framework agreement agreed to re-evaluate terms after seven years and lower the threshold to 10 billion euros.

The OECD paper released on Thursday made some changes to the proposals, saying the number of profits to be reallocated should be at least 20%-30% of profits over 10%. This move that could boost smaller economies' tax revenues. Under OECD terms, even the smallest economies will also benefit from lower thresholds so that they can tax multinationals.

A small group of countries, like Hungary and Ireland, "have not yet joined" the scheme because they rely on low-tax policies to attract investment from some of the world's biggest companies. The final signing of the agreement may wait until October.