G-20 News

G20 and OECD reach global agreement on business taxation

The inclusive framework of the G20 and the OECD have reached an agreement on the global corporate tax.

The inclusive G20 framework and the OECD released their global agreement on business taxation on July 1. According to him, the 100 largest companies in the world must pay taxes in countries where their sales are important as well as in their country of origin from 2023. In addition, a minimum corporate tax rate of 15% will be applied. to these multinational corporations. Of the 139 members of the cadre, only nine, including Ireland, are currently opposed to the deal.

Accrual-based taxation will apply to those with annual consolidated sales of at least 20 billion euros and annual operating profit greater than 10%. Samsung Electronics and SK Hynix are likely to be included in this group. The minimum rate of corporation tax will be applied to those whose consolidated annual turnover is greater than or equal to 750 million euros.

Depending on the deal, the South Korean government can impose taxes on global companies including Google and Apple, and foreign governments can do so with respect to Samsung Electronics, etc.

The agreement states that 10 percent of the aggregate profit of a multinational enterprise is considered ordinary profit, such profit is subject to tax in its home country, and taxation of 20 to 30 percent of profit. additional will be made on an accrual basis. .

As mentioned above, Samsung Electronics and SK Hynix are likely to be affected by the agreement. Last year, Samsung Electronics achieved sales of 236.81 trillion won with an operating profit ratio of 15.19%. SK Hynix’s figures were 31.900.4 billion won and 15.6%.

The impact of the minimum corporate tax rate on South Korean corporations is likely to be rather limited. Indeed, corporate tax rates in South Korea are relatively high, up to 25% to be precise.

G20 member states aim to finalize the deal at their summit scheduled for October this year so that it can enter into force in 2023. In addition, they plan to lower the sales threshold to € 10 billion in 2030.