The UK is among 136 countries to agree to implement a new tax on Multinational Enterprises (MNEs), the Office for Economic Co-operation and Development (OECD) has revealed.

The “historic reforms” will see global firms pay a minimum 15 per cent corporation tax rate in the countries they do business in from 2023.

Known as Pillar One and Pillar two, the two major principles have been agreed to in 136 countries around the world, representing 90 per cent of global GDP.

This means multinationals will pay their “fair share of tax in the countries they do business in” and pay corporation tax at a minimum rate of 15 per cent – preventing firms from funnelling profits to headquarters in low tax jurisdictions.

Global firms with at least a 10 per cent profit margin will see 25 per cent of any profit above the 10 per cent profit margin reallocated and then subject to tax in the countries they operate in.

The move is expected to reallocate approximately £125 billion of profits from 100 of the world’s largest and most profitable MNEs.

Commenting on the move, Rishi Sunak said: “I am proud that the UK has taken a leading role in the world’s efforts to upgrade the global tax system for the modern age – a key priority of our G7 presidency.

“We now have a clear path to a fairer tax system, where large global players pay their fair share wherever they do business.”

OECD Secretary-General Mathias Cormann added: “Today’s agreement will make our international tax arrangements fairer and work better.

“This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalised and globalised world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform.”

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