The G-7 group of advanced economies announced an historic accord to set a minimum global corporate tax rate on Saturday, taking a first step to reverse a four-decade decline in the taxes paid by multinational corporations.

The deal reached at the G-7 meeting in London by Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S. is a major breakthrough for the Biden administration’s efforts to enact a floor on the taxes paid by corporations worldwide.

Treasury Secretary Janet Yellen has been adamant that the U.S. needs to work with other countries to prevent firms seeking lower tax obligations from simply moving elsewhere. Corporate tax rates across the globe have fallen dramatically over the last four decades.

“The G-7 Finance Ministers have made a significant, unprecedented commitment today that provides tremendous momentum toward achieving a robust global minimum tax at a rate of at least 15 percent,” Yellen said in a statement.

“That global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world.”

In remarks at the close of the meeting, Yellen told reporters that the agreement represented the revival of multilateral cooperation after years of strain under former president Donald Trump.

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Under the deal, the U.S. is expected to give up some taxing rights on overseas profits of U.S.-based tech giants.

The deal enables countries to tax 20% of the profits of “the largest and most profitable multinational enterprises” that have profit margins of at least 10%.

While the agreement does not explicitly name tech companies, the line is a nod to the push by European countries to levy taxes on the operations in their countries of firms such as Apple and Amazon, which are headquartered in the U.S. but reap significant revenue abroad. The Europeans insist that it is unfair for the Internet behemoths to collect revenue in their countries without paying more in taxes.

The U.S. objected to singling out tech companies in the deal. Yellen said that as a compromise the G-7 finance ministers agreed to apply the change to a broader set of multinational firms that the tech firms “would qualify by [under] any definition.” The deal does not define which firms would be affected. That pact will move in tandem with the deal for a global minimum tax.

“The timing remains to be worked out, exactly, but there is broad agreement that these two things go hand in hand,” Yellen told reporters.

The Biden administration is seeking to raise the domestic corporate tax rate from 21% to 28% to pay for its spending priorities, such as infrastructure and education.

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Republican critics have charged that the move would lead American firms to relocate abroad, hurting domestic jobs and investment. The international tax agreement helps the White House argue that it can lift domestic tax rates without pushing multinationals abroad, because under the agreement they would still face a minimum level of taxation.

Republican lawmakers have been skeptical about granting European countries additional taxing rights over the tech giants. The debate between Europe and the U.S. over taxing digital firms led to several major trade clashes under the Trump administration, with America threatening retaliatory tariffs over European attempts to tax the tech firms.

But the U.S. changed course after last year’s presidential election, with Yellen telling the Group of 20 nations in February that the U.S. has dropped demands to allow firms to opt out of new global digital taxes. That helped pave the way toward Saturday’s deal.

The deal starts what is expected to be a long and arduous process toward changing international tax laws. Negotiators hope to advance progress toward a binding agreement at a meeting of leaders of the Group of 20 in Italy in July.

Yellen told reporters that negotiators then hope to move toward a final deal this fall. But there are a number of sticking points. The deal faces opposition from countries, including Ireland, which rely on revenue by acting as tax havens, and the new U.S. tax rules have to be approved by Congress.

International treaties require passage by a two-thirds majority in the Senate, meaning GOP votes will be necessary to ratify changes pushed by the Biden administration. Republicans have criticized the effort, with Sen. Mike Crapo, R-Idaho, the top Republican on the Senate Finance Committee, warning that the U.S. “should not be willing to accept an agreement that continues to target American companies.”

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“Republicans are unlikely to go along with this – you’re ceding tax authority and doing so in a way that disproportionately hurts U.S. companies,” said Donald Schneider, who served as chief economist to Republicans on the House Ways and Means Committee.

It is unclear how much support the new tax floor has in parts of the European Union and other low tax countries. Irish finance minister Paschal Donohoe has said he has “significant reservations” about the U.S. plan and said the country will maintain its 12.5% corporate tax rates for years to come.

Donohoe said Saturday that Ireland expects to lose up to a fifth of its corporate tax revenue under the plan – amounting to roughly 2 billion euros a year. The country’s relatively low tax rate is credited with helping to attract major corporations like Apple, Facebook and Google to Ireland in recent years, and Donohoe told the Irish Times that he plans to continue to “make the case for legitimate tax competition within certain boundaries.”

Any agreement that is approved by the Organization for Economic Cooperation and Development will have to take the needs of smaller countries into account, he said.

But French Finance Minister Bruno Le Maire hailed the agreement as a “historic step” in a video posted to Twitter on Saturday and has made clear in previous statements that he sees a 15% rate as the bare minimum. Other wealthy European nations celebrated the deal, saying that it would ensure that corporations fulfill their obligations and that governments receive adequate funding. Olaf Scholz, Germany’s finance minister, said that the agreement was “very good news for tax justice and solidarity and bad news for tax havens around the world.”

Spain, which is not part of the G-7, endorsed the plan on Friday by signing onto a letter in The Guardian along with the finance ministers of Italy, Germany and France. The show of support from the European Union’s fourth-largest economy was viewed as a sign that the agreement could draw wider support across the bloc. Spanish newspaper El Pais has estimated that a 15% tax rate would almost double the revenue that the country receives from corporations each year.

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Some major tech companies welcomed the news. Many firms are willing to pay slightly more in taxes in exchange for more certainty, particularly given the lack of clarity in international tax regimes in recent years, according to Daniel Bunn, an international tax expert at the Tax Foundation, a right-leaning think-tank.

“Facebook has long called for reform of the global tax rules and we welcome the important progress made at the G-7,” said Nick Clegg, a Facebook spokesman, on Twitter. “Today’s agreement is a significant first step toward certainty for businesses and strengthening public confidence in the global tax system.”

José Castañeda, a Google spokesman, added: “We strongly support the work being done to update international tax rules. We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”

The Biden administration earlier floated a 21% global tax on U.S. firms. The 15% rate will make it easier for countries to join the accord but may reduce its effectiveness. If the U.S. domestic rate is raised to 28% but the global minimum tax is 15%, firms may still have strong incentives to move overseas. Yellen stressed that the world needs more tax revenue from the wealthiest corporations.

“G-7 economies came together to agree The Post-pandemic world must be fairer, especially with regard to international taxation,” Yellen said. “We need to have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises and ensure that all citizens and corporations fairly share the burden of financing government.”

Others downplayed the significance of the accord. G-7 countries all already have corporate tax rates above 15%, said Kyle Pomerleau, a tax expert at the American Enterprise Institute, a conservative-leaning think-tank.

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“It’s rather simple that countries that have statutory tax rates of 15 percent agree that other countries should also have that,” Pomerleau said. “This is step one, and from Yellen’s perspective that’s good, but it’s step one of 1,000.”

Yellen said in remarks to reporters that the agreement does not depend on voluntarily compliance by tax havens. Instead, she said it will enable countries to levy taxes on the overseas earnings of firms headquartered in those havens, putting pressure on them to raise their domestic tax rates.

“I think this is an agreement that when you understand all the details you see it does not require absolute agreement across the board,” Yellen said. “It has a way of bringing holdouts into it.”

Global tax negotiations have been ongoing at the G-7 and the OECD for the better part of a decade. But some experts said the speed with which the U.S. made major progress Saturday was striking nonetheless.

Alarm has grown among international tax experts about declining taxation. The average corporate tax rate globally was about 40% in 1980, falling to about 23% in 2020, according to the Tax Foundation, a conservative-leaning think-tank. As much as $700 billion in taxes from the world’s largest multinational firms was stashed in tax havens in 2017, research by a team of economists found.

“It’s an early and quick win for Yellen and Treasury, and it’s sort of remarkable,” said Steve Rosenthal, a tax expert at the nonpartisan Tax Policy Center, a think-tank. “This has been lingering for years and years – though of course Trump did not believe in multinationalism – and to start these negotiations in January and have a tentative agreement in June is pretty impressive.”

Others stressed the obstacles that loomed ahead. Douglas Holtz-Eakin, a Republican former director of the Congressional Budget Office, has raised concerns about whether the U.S. will give up too much of its tax base in search of a deal with Europeans. He also stressed how many questions were left unresolved by Saturday’s statement, including the structure of the 15% minimum tax and how it would function or be approved.

“It’s easy to set at a table and agree, ‘Yes we should have a 15 percent minimum tax.’ It’s another thing to pass through the U.S. Congress, and the U.K. parliament, and everyone else,” Holtz-Eakin said. “We can agree on the concepts – I’m sure – but will we actually have a law enforced in every country?