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We  not feel the impact of the new 15% tax rate as the lowest immediately but the effects will be wide-ranging over the mid and long term. It basically affects big companies, techs especially. It also fits with the Biden's administration proposal to increase corporate taxes at home. The president has proposed increasing the current corporate rate of 21% to 28%; it was slashed from 35% in former President Donald Trump's 2017 tax bill.

Major economies are aiming to discourage multinationals from shifting profits - and tax revenues - to low-tax countries regardless of where their sales are made. While this is G7 to start with, it's an important starting point to bring in G20 and then OECD's 140 countries. The OECD and G20 countries aim to reach consensus on both by mid-year, but the talks on a global corporate minimum are technically simpler and less contentious. If a broad consensus is reached, it will be extremely hard for any low-tax country to try and block an agreement.

Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional home countries. The issue can be contentious within the European Union, where various member states charge different corporate tax rates and can attract big-name firms by doing so. Ireland's tax rate, for example, is 12.5%, while France's can be as high as 31%.

The key is that 15% would be the minimum to apply on overseas profits. The differential between home and overseas tax rates would narrow substantially, making it harder to justify putting "more profits overseas". Other items still to be negotiated include whether investment funds and real estate investment trusts should be covered, when to apply the new rate and ensuring it is compatible with U.S. tax reforms aimed at deterring erosion.

Republican critics have charged that the move would lead American firms to relocate abroad, hurting domestic jobs and investment. The international tax agreement helps the White House argue that it can lift domestic tax rates without pushing multinationals abroad, because under the agreement they would still face a minimum level of taxation.

The agreement would also impose an additional tax on some of the largest multinational companies, potentially forcing technology giants like Amazon, Facebook and Google as well as other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation.

Officials described the pact as a historic agreement that could reshape global commerce and solidify public finances that have been eroded after more than a year of combating the coronavirus pandemic. The deal comes after several years of fraught negotiations and, if enacted, would reverse a race to the bottom on international tax rates. It would also put to rest a fight between the United States and Europe over how to tax big technology companies.

Garnering wider support will not be easy. Ireland, which has a tax rate of 12.5 percent, has come out against the global minimum tax, arguing that it would be disruptive to its economic model. Some major countries such as China have been quietly tracking the proceedings but are considered unlikely to buy in. Finance officials believe that if enough advanced economies sign on, then other countries will be compelled to follow suit and they plan to exert political pressure on Ireland to join the agreement.

Smaller developing countries like Malaysia have not been using a "low tax rate" to attract big MNCs to relocate - rather they get "tax breaks over a certain period of time". This is more palatable and gives us more flexibility, and the right to attract the kind of companies we want on our shores.

p/s: Natasha Liana Hudson, born in Ipoh, Perak, Malaysia, is a model, actress, writer, and singer. She is an award winning actress that has been seen on numerous television commercials, films and TV series in Malaysia and Indonesia. She also published two books in 2007, one an English poetry book titled My heart, My soul, My passion and a children's story book titled Puisi Indah Si Pari Pari. 

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