The German parliament is the first to approve the implementation of a global minimum corporation tax, as part of an international deal to ensure large companies pay a minimum tax rate of 15 percent.
Multinational firms will have to pay that level of tax on all of the profits they make worldwide, regardless of where the profits are generated, reports Reuters.
In 2021 almost 140 countries agreed to an Organisation for Economic Cooperation and Development deal they are meant to implement from next year to prevent big companies like Alphabet's Google or Amazon avoiding taxation by legally transferring profits to low-tax countries.
This will apply to all companies with turnover above 750 million euros ($800 million) per year. The good news is that the new minimum 15 percent rate is expected to raise $220 billion globally for governments who can then use the proceeds to better the lives of their citizens. The ratification process has hit hurdles in various countries, so we'll have to wait and see whether international implementation of the new tax actually gets done - and successfully achieves its objectives.
Last December the European Union member states agreed on a common directive to ensure uniform implementation of the tax within the EU, and that directive must be passed into national law in all EU countries by the end of this year.