On Friday, the Organization for Economic Cooperation and Development (OECD) announced the completion of the deal, which will be signed by 130 countries in 2022 after drafting the related multilateral agreement.
Maait expounded that the deal preserves Egypt’s rights to collect taxes from multinational companies that are working in the local market, which will enhance Egypt’s tax revenues.
The deal mandates a minimum tax of 15 percent on revenues of companies globally with annual revenue of more than €750 million (equivalent to $866 million).
The deal was reached after several years of OECD-led negotiations to control tax evasion, with efforts accelerating amid the losses to global economies because of the pandemic shock.
In July, Egypt and 129 other countries reached an unprecedented deal on the distribution of the taxes, particularly as they relate to multinational companies working in the digital economy through online platforms.
The deal focuses on companies that lack a legal framework to work in these countries.
The 130 countries have agreed on setting new tax measures, which are expected to help push these companies towards paying their fair share of taxes by applying a minimum 15 percent tax limit.
“That deal will preserve Egypt’s tax receipts from the multinational companies’ activity in the Egyptian market, and it is expected to enhance Egypt’s tax revenues from companies working in the digital area in the domestic market,” Maait explained.
Advisor to the Finance Minister for Tax Policy Ramy Yousef said that Egypt has contributed to drafting this deal over the past several years, adding that Egypt will work with the members of the OECD’s programme on base erosion and profit shifting (BEPS) to settle the technical details of the agreement.
Tax BEPS particularly affect developing countries, which disproportionately rely on corporate income tax, according to OECD.
Governments must act together to tackle BEPS and restore trust in domestic and international tax systems, according to the OECD.
BEPS practices cost countries up to $240 billion in lost revenue per year, representing up to 10 percent of the global corporate income tax revenue, according to the OECD.
Under that OECD/G20 inclusive framework on BEPS, 139 countries and jurisdictions – including Egypt – are implementing 15 actions to tackle tax avoidance, improve the coherence of international tax rules, ensure a more transparent tax environment and address the tax challenges arising from the digitalisation of the economy.