[adrianb]

Also it seems the agreement is that 7 countries agree that all countries in the world need to have that minimum rate? How would they convince the rest of 180+ countries? Especially, how do you convince the ones who would lose a lot of tax income by closing their tax heaven loopholes.

[dalbasal]

Dunno. They haven't actually agreed to minimum rates yet. They just said they might in future.

Broadly, you are not going to convince pure tax havens (eg Bermuda) to close tax loopholes. They don't even have corporate tax. You can do other things though.

Part of the problem here is that reporting is mixing up issues. It's not clear how (if at all) the MSFT-Bermuda shenanigans relate. The minimum tax rate hasn't been done yet, and may not be. What they do seem to have agreed on is some sort of joint accounting standards. Accounting standards define what counts or doesn't count as an expense, investment, etc.

Where that (may, we don't know yet) relate to the rest of 180+ countries is, for example: US accounting standards no longer recognize payments to (for eg) the Bermuda entity as an expense transaction.

When you are uncoordinated, discrepancies in these standards allow companies to pick and choose.

[occamrazor]

Basically, you do not consider payment to non-cooperating countries for tax purposes.

For example ACME Inc. produces widgets with costs of 50 and revenue of 100 in the US. To avoid taxes, it also pays 50 in "licensing fees" to ACME Tax Heaven in the Cayman Islands, so that the profit in the US is 0.

If the payment to the Cayman Islands is not counted, then the taxable profit in the US becomes 50.

[pochamago]

These seven countries have a lot of sway, but even if it's only these countries that implement it it will likely affect a number of corporations. There are benefits to being legally located in stable modern economies, so this at the very least minimizes shopping around for the lowest tax rate among them.