Critics say the idea of an internationally agreed minimum corporate tax rate amounts to a sort of cartel. Defenders argue that it limits the ability of multinationals to arbitrage different countries' tax rules and not pay their "fair share" of tax.

A total of 136 countries have agreed to set a global minimum corporate tax rate of 15 per cent – requiring some nations such as Ireland to increase their low rates. 

The push for a global minimum has been led by US President Joe Biden, who is bidding to raise the US corporate tax rate from its current 21 per cent rate to as much as 28 per cent, although Democrat lawmakers in Capitol Hill may trim that rise somewhat. (Under the Trump administration, the corporate rate was slashed from 35 per cent, when it had been one of the highest in the developed world.)

Biden, along with some other nations, has complained that multinationals use low-tax jurisdictions to book their profits and avoid paying higher rates in the countries where they do most of their business. Defenders of such an approach say competition between different countries’ tax rates is healthy and puts governments under pressure to keep taxes low. They have also dubbed the idea of a global minimum tax as a tax “cartel” and ultimately harmful, as other cartels tend to be. On the other side, organisations calling for such a minimum say companies aren't paying taxes where they often do the bulk of their business, and are avoiding paying a fair burden. 

With many high net worth individuals owning operating companies - some of which carry out cross-border business - the tax changes could affect wealth managers' clients. 

Announced by the Paris-based Organisation of Economic Co-Operation and Development, the agreement said that multinational enterprises must pay a tax rate of at least 15 per cent from 2023.

The OECD said the deal covered nations representing more than 90 per cent of global GDP. The organization said the deal will “reallocate more than $125 billion of profits from around 100 of the world’s largest and most profitable MNEs (multinational enterprises) to countries worldwide.”

With Estonia, Hungary and Ireland having joined the agreement, it is now supported by all OECD and G20 countries. Four countries - Kenya, Nigeria, Pakistan and Sri Lanka - have not yet joined the agreement, the OECD said. (Ireland, which is home to a number of multinationals, has a corporate rate of 12.5 per cent. Ireland has been attracting some inward flows of capital from the UK following the 2016 Brexit referendum.)

The OECD denied that the deal was about ending tax competition, arguing that it merely “puts multilaterally agreed limitations on it.”

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

The affected countries aim to sign a multilateral convention during 2022, with effective implementation in 2023, the OECD said.