A global tax on business? Here’s how it would work

Leaders at the Group of 20 summit in Rome this weekend express broad support for sweeping changes in how big global companies are taxed.

The goal: deterring multinationals from stashing profits in countries where they pay little or no taxes — commonly known as tax havens.

With final approval by the group expected in Sunday’s summit statement, the proposal already had been finalized in October among 136 countries and sent to the G-20 for a final look after complex talks overseen by the Organization for Economic Cooperation and Development.

The measure would update a century’s worth of international taxation rules to cope with changes brought by digitalization and globalization.

The most important feature: a global minimum tax of at least 15%, a key initiative pushed by U.S. President Joe Biden. “This is more than just a tax deal — it’s diplomacy reshaping our global economy and delivering for our people,” Biden tweeted from the summit on Saturday.

Treasury Secretary Janet Yellen says it will end a decadeslong “race to the bottom” that has seen corporate tax rates fall as tax havens sought to attract businesses that used clever accounting to take advantage of low rates in countries where they had little real activity.

Here’s a look at key aspects of the tax deal:

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Associated Press writer Joshua Boak in Washington contributed to this report.