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Ireland has agreed to join a key international agreement for a global minimum do rates on corporations around the world, abandoning its prized low-tax policy that has attracted major multinationals including Apple, Facebook and Google.

The country, which has had a 12.5% ​​corporate tax rate since 2003, said in July that it had “reservations” about a proposal to impose a global minimum rate of 15% on corporations, regardless of where they are headquartered. however, but suggested it was open to continuing talks and reaching an agreement that it could support.

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But the text updated this week omitted the phrase “at least,” leading the way for Ireland to endorse the measure shortly before a meeting where representatives from 140 countries ratified the agreement. President Biden and Treasury Secretary Janet Yellen have been a major force behind the international movement to crack down on corporate tax avoidance.

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“I believe the benefits of staying in such a historic international agreement far outweigh the disadvantages of staying out,” Finance Minister Pascal Donohoe said during a news conference on Thursday. “It’s a difficult and complicated decision, but I believe it’s the right one.”

The US Treasury Department applauded Ireland’s decision to ensure that companies pay their fair share of taxes, leading the world to a “generational achievement”. Ireland said it had received assurances from the European Commission that it could maintain its 12.5% ​​rate for firms earning less than $867 million and create tax incentives for research and development.

Donohue said an estimated 1,500 multinationals would be affected by the higher rate in Ireland. This equates to almost one in six workers in Ireland.

The minimum global corporate tax rate – which would be imposed on companies earning more than $866 million – is intended to eliminate some of the tax havens that allow multinationals to save their profits, while protecting smaller countries from larger firms. Gives more tax revenue.

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Yellen has said that a global tax, which would apply to companies’ foreign profits, would eliminate what is described as a “global race below” in the context of corporate taxes.

Corporations employ a variety of tactics to reduce their tax liability, often by relocating profits and revenues to low-tax countries such as Bermuda, the Cayman Islands or Ireland, where sales were made. Billions of US dollars are spent every year as practiced by US and foreign multinationals Treasury Department.

The Organization for Economic Co-operation and Development has pushed for years to eliminate corporate strategies that “take advantage of gaps and mismatches in tax rules to avoid paying taxes.”

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The global minimum tax would apply to companies’ foreign income, meaning countries could still establish their own corporate tax rates at home.