G20 finance ministers on Saturday gave their backing to a historic deal to overhaul the way multinational companies are taxed and urged hold-out countries to get on board.
Some 132 countries have already signed up to a framework for international tax reform, including a minimum corporate rate of 15 percent, struck earlier this month.
But the endorsement by the 19 biggest economies plus the European Union will help ensure it becomes a reality following years of negotiations.
“We have achieved a historic agreement on a more stable and fairer international tax architecture,” the ministers said in a final statement following two days of talks in Venice, hosted by G20 president Italy.
“We endorse the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax.”
US Treasury Secretary Janet Yellen, among those attending the grouping’s first face-to-face meeting since February 2020, said the momentum must not now be lost.
“The world is ready to end the global race to the bottom on corporate taxation,” she said in a statement, adding that it “should now move quickly to finalize the deal.”
French Finance Minister Bruno Le Maire said it was a once-in-a-century opportunity for a “tax revolution,” adding: “There is no turning back.”
His German counterpart, Olaf Scholz, tweeted: “Finally, large corporations can no longer escape their tax liability.”
The reforms aim to prevent countries from competing to offer the lowest tax rates to attract investment, which has often resulted in multinationals paying lower levels of tax.
A final agreement is expected in the run-up to the G20 leaders’ summit in Rome in October, with hopes the reforms can be in place by 2023.
Countries including the United States, France, and Germany have been pressing for a higher minimum tax rate.
The minimum tax rate is expected to affect fewer than 10,000 major companies, but the OECD estimates an effective 15 percent rate would generate an extra $150 billion in revenue per year.