A global corporate-tax deal takes shape

FOUR WEEKS ago the finance ministers of the G7 countries, meeting in London, trumpeted that they had sealed a “historic” and “global” deal to reform the taxation of multinational companies and thus to curb tax avoidance. In fact, that was just the precursor to an agreement struck on July 1st, after fraught negotiations in the virtual realm involving 130 jurisdictions. Though the talks were held under the auspices of the OECD, an economic club of mainly rich countries, the deal has been agreed to by rich and poor alike.Officials signed up to a five-page statement with two main elements: a new minimum tax rate on multinationals’ profits; and a reallocation of the right to tax those of the largest, away from places where they register their assets and towards where they make their sales. In return for those new tax rights, governments would refrain from some unilateral measures, notably taxes on giant technology companies. Securing agreement from so many countries on such a touchy issue is a remarkable feat. Even so, there is more work to do before the future of corporate taxation is settled.