Most of the world's countries have reached a historic agreement according to which large companies must pay a fairer share of taxes.
As many as 136 countries have agreed to introduce a corporate tax rate of at least 15 percent, as well as a fairer system of taxing profits where they are earned.
The agreement follows concerns that multinational companies are shifting profits through lower-tax jurisdictions to cut costs.
Still, critics claim that the 15 percent rate is too low, and that companies will find ways to comply with the rules.
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British finance minister Rishi Sinak said that the agreement "will improve the global tax system for the modern era".
"We now have a clear path to a fairer tax system, where the big global players pay a fairer share where they do business," he said.
The Organization for Economic Co-operation and Development (OECD), an intergovernmental organization, has been negotiating the minimum tax rate for the past decade.
She said the deal could bring in an extra $150 billion in taxes annually, boosting economies as they recover from Covid.
The OECD adds that it does not want to "abolish" tax competition among countries, only to limit it.
The corporate tax floor will enter into force in 2023.
Countries will also have more room to tax multinational companies that operate within their borders, even if they are not physically present.
The move, which is expected to hit giants like Amazon and Facebook hard, will apply to companies with global sales above $20 billion and profit margins above 10 percent.
A quarter of every profit they make above the 10 percent threshold will be redistributed to the countries where it was made and taxed there.
"This is an agreement with far-reaching consequences that ensures our international tax system is fit for purpose in a digitized and globalized world economy," said OECD Secretary-General Matthias Kormann.
"Now we must act quickly and diligently to ensure the effective implementation of this major reform."
'Winners and Losers'
Analysis by Theo Leggett, Business Correspondent
This agreement marks a comprehensive change in approach when it comes to the taxation of large global companies.
In the past, countries would often compete with each other to make a more attractive offer to multinational companies.
It made sense if these companies could enter the country, build a factory and create jobs.
You could say that they were giving something in return.
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But the giants of the new digital age have become adept at shifting profits around, from the regions where they operate to those where they will pay the lowest taxes.
Good news for tax havens, bad news for everyone else.
The new system should minimize opportunities for profit shifting and ensure that the largest companies pay part of their taxes where they do business, rather than where they choose to have their headquarters.
136 countries have agreed to this - a great feat in itself. But there will inevitably be losers, just as there will be winners.
'Race to the Bottom'
More than 100 countries backed the original OECD proposals when they were announced in July.
Ireland, Hungary and Estonia, which have corporate tax rates below 15 percent, initially resisted but are now agreeing. However, Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined the agreement.
The pact also resolved a dispute between the US and countries such as the UK and France, which have threatened to impose a digital tax on large, mostly American, tech firms.
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US Treasury Secretary Janet Yellen said: "As of this morning, virtually the entire world economy has decided to end the race to the bottom in corporate taxation."
"Instead of competing on our ability to offer low corporate rates, America will now compete on the skills of our workers and our ability to innovate, which is a race we can win."
Oxfam said the 15 percent tax rate was too low and would "do little or nothing to end harmful tax competition".
He believes that companies should pay at least 25 percent wherever they are.
In July, its international executive director Gabriela Bučer stated:
"The 15 percent rate has already been used by some in Australia and Denmark as an excuse to cut the domestic corporate tax rate, risking the start of a new race to the bottom."
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