By Leigh Thomas

PARIS, (Reuters) – Friday’s global agreement to make sure big corporations pay a minimum of 15% in tax and to make it harder to avoid paying taxation will be completed after Estonia, Hungary and Ireland joined the group.

This agreement will end the four-decade-old “race to bottom” of governments trying to attract investment and job creation by taxing multilateral companies lightly while allowing them to search for lower tax rates.

Four years ago, negotiations moved online in the midst of the pandemic. The support from President Joe Biden, and the cost of COVID-19, has given additional momentum to the process. There are 140 countries involved.

At 1600 GMT on Friday, the Organisation for Economic Cooperation and Development in Paris, which is leading the discussions, will announce the results of the negotiations.

It will fix a corporate minimum tax rate at 15%, and permit governments to tax greater shares of profits from foreign multinational corporations.

The goal of the legislation is to prohibit large corporations from making profits in low-tax jurisdictions like Ireland. This applies regardless of whether their clients live there.

Estonia and Ireland both dropped objections Thursday morning, while Hungary announced on Friday that they would be signing up.

Mihaly Varga, Finance Minister of Hungary, told reporters that Hungary had accepted the 10-year period for transition “so Hungary can join the deal in good faith”.

Paschal Donohoe from the Irish Finance Ministry stated that while it was difficult to make a decision, he believed it was the right one. This statement came after Ireland had given up 12.5% of its tax rate on large multinationals.

Estonian Prime Minister Kaja Kallas announced Tallinn’s support and said that the minimum tax would not change anything for most Estonian entrepreneurs.

(Graphic: The four-decade decline in corporate tax rates, https://graphics.reuters.com/GLOBAL-TAX/lbpgnoryevq/chart.png)

Some developing countries are seeking higher rates of tax, but they claim their needs have been overlooked in order to support richer countries such as Ireland. Ireland refused to accept a deal that would allow for a 15% minimum tax rate.

Martin Guzman (Argentine Economy Minister) stated on Thursday that the proposals placed on the table required developing countries to make a choice between “something good and something terrible”.

Although they cannot stop the deal being completed, they risk losing any potential benefits.

Although Argentina reluctantly signed up for a prior version, Kenya and Nigeria opted to continue, while India (which had previously backed that version) has raised concerns.

After a deal is reached on Friday, the document will be sent to finance ministers of the Group of 20 economic power to formalize endorsement at next week’s meeting in Washington.

However, the U.S.’s current position is not clear. This depends partly on Congress continuing to hold tough tax reform negotiations.

The deal is expected to be signed by the countries that support it. It will then become law in their country next year, so it can go into effect starting 2023. Officials close to the negotiations describe it as very tight.