On June 5, the finance ministers of the G-7 member countries (Canada, the United States, Japan, France, Germany, Italy and the United Kingdom) agreed to a minimum tax of at least 15% for large multinational companies such as Google, Amazon and Facebook. The tax, according to these countries, could allow Latin American countries to compete for investment without sacrificing tax revenues. Now, the tax will also have to be discussed at the G-20 in July and then at the Organization for Economic Cooperation and Development (OECD) in October before coming into force.

For some experts, the existence of this global minimum tax may slow down the tax race between countries and allow Latin American states to compete for investments without having to sacrifice tax revenues. However, others argue that the proposed tax is still too low as South America, for example, has higher corporate taxes than Asian or European jurisdictions. In this regard, Argentina’s Minister of Economy, Martin Guzman, welcomed the agreement although he argued that 15% is still too low.

The initiative seeks to establish a global minimum tax for multinational companies in order to discourage corporations from shifting their operations from one country to another in search of greater tax advantages. Thus, the idea of the “global minimum” is to stop competition between countries to offer lower and lower taxes to large companies, and to discourage tax havens. The OECD estimates that the proposal could generate between US$50 billion and US$80 billion in additional taxes per year that companies would end up paying worldwide.