One IBC on How OECD’s 15% Global Minimum Corporate Tax Will Affect International Businesses

IRVINE, Calif.--(BUSINESS WIRE)--136 members of the Organization for Economic Cooperation and Development (OECD) have agreed on a minimum corporate tax rate of 15%. This is a breakthrough in a years-long effort to overhaul international tax laws and raise more tax from large multinational tech giants such as Google and Facebook. First proposed by the US, it has since then gained support from the G7, the G20, and now most of the OECD.

The global minimum corporate tax is expected to resolve international taxation of the digital economy and will come into effect in 2023. However, tax experts at One IBC believe that tax reform on a global scale is going to require more time than that. At 15%, this minimum corporate tax rate is currently higher than Ireland’s but is still lower than that of the G20’s members.

In addition, One IBC believes that this is just the initial phase of the global minimum corporate tax law. “Although the plan is said to target the 100 biggest tech companies only, this law may expand its scope to include other industries as well in the future. How this new tax rate is going to affect international commerce is currently the most commonly asked question.” Le Hung Anh, professionally known as Jimmy Lee, CEO of One IBC says. “There is also the concern that the global minimum corporate tax may increase the cost of shipping services and supplies.”

If that happens, there are going to be major shifts in the field of international service for corporations. To attract more foreign investment, governments may have to utilize different strategies to create value, says Lee. Investors can expect to see more welcoming arms in the form of shorter wait time, less strict bureaucracy, more beneficial policies, etc. In addition, there will be more jurisdictions to choose from now that there is a minimum corporate tax rate, he adds.

The global minimum corporate tax after all is one of many attempts to enhance globalization in the near future. As a reputed corporate service provider, One IBC suggests businesses to get ready to go multinational. Overseas companies forming now will be in time for many beneficial offerings emerging from foreign jurisdictions competing with each other in order to attract more foreign investments.