Rome October 31 2021: Technology sector companies profitability is likely to hit a significant hit as leaders of the world's 20 major economies have approved a global agreement that will see the profits of large businesses taxed at least 15 percent.
It follows concern that multinational companies are re-routing their profits through low tax jurisdictions.
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This probably shatter the investor confidence in technology sector. In last one year Technology companies provided phenomenal returns TRG 159 percent, Netsol 64.5 percent, System 129.1 percent and Avanceon 67.3 percent. While Octopus Digital provided 74 percent return since initial Public Offering.
The pact was agreed by all the leaders attending the G20 summit in Rome.
Climate change and Covid are also on the agenda of the summit, which is the leaders' first in-person gathering since the start of the pandemic.
Ireland, Hungary and Estonia - all of which have corporate tax rates below 15% - at first resisted the plan but are now on board.
Ireland currently has a rate of 12.5%, which has helped it attract large amounts of foreign investment and become a base for big US firms such as Apple. But after securing a compromise on the wording of the agreement, Finance Minister Pascal Donohoe said he was "absolutely certain" Ireland's interests were served by being part of the deal.
However, Kenya, Nigeria, Pakistan and Sri Lanka have not yet signed up to the plan.
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The pact resolves a spat between the US and countries such as the UK and France, which had threatened a digital tax on big mainly American tech firms.
US Treasury Secretary Janet Yellen said: "As of this morning, virtually the entire global economy has decided to end the race to the bottom on corporate taxation.
"Rather than competing on our ability to offer low corporate rates, America will now compete on the skills of our workers and our capacity to innovate, which is a race we can win."
The G20 group - made up of 19 countries and the European Union - is short by two, however, with China's Xi Jinping and Russia's Vladimir Putin choosing to appear via video link.
The tax deal, which was proposed by the US, is expected to be officially adopted on Sunday, according to Reuters news agency, and will be enforced by 2023.
US Treasury Secretary Janet Yellen said the historic agreement was a "critical moment" for the global economy and will "end the damaging race to the bottom on corporate taxation".
She wrote on Twitter that US businesses and workers would benefit from the deal even though many US-based mega-companies would have to pay more tax.
The G20 summit comes ahead of the much-anticipated COP26 summit on climate change in Glasgow which begins on Monday. What happens at the G20 may set the tone for COP26, with sharp divisions remaining between countries on their commitments to tackling climate change.
Italy's Prime Minister Mario Draghi opened the two-day G20 summit with a message of unification, telling world leaders that "going it alone is simply not an option. We must do all we can to overcome our differences".
There are increasingly dire warnings from experts for the future if urgent action is not taken to cut carbon emissions.
Speaking to the BBC, UK Prime Minister Boris Johnson described climate change as "the biggest threat to humanity", saying it posed a "risk to civilisation basically going backwards".
However, he acknowledged that neither the G20 meeting nor COP26 would halt global warming, but could, if the right measures were taken, "restrict the growth in the temperature of the planet".
According to Reuters news agency, a draft communiqué outlines a promise from the G20 to work towards limiting the rise in temperatures to 1.5C (2.7F), saying it "will require meaningful and effective actions by all countries".
The draft also notes the need for "developed countries to mobilise $100bn (£73bn) annually from public and private sources through to 2025 to address the needs of developing countries" so they can tackle climate change - a promise richer countries have failed to keep since 2009, when it was initially pledged.