EXPLAINER: How G20-backed corporate minimum tax would work

ROME (AP) — Leaders at the Group of 20 summit in Rome are expressing broad support for sweeping changes in how big global companies are taxed.

The goal: deterring multinationals from stashing profits in countries where they pay little or no taxes — commonly known as tax havens.

The proposal was finalized in October among 136 countries and sent to the G-20 for a final look after complex talks overseen by the Organization for Economic Cooperation and Development. It would update a century's worth of international taxation rules to cope with changes brought by digitalization and globalization.

The most important feature: a global minimum tax of at least 15%, a key initiative pushed by U.S. President Joe Biden. “This is more than just a tax deal — it’s diplomacy reshaping our global economy and delivering for our people,” Biden tweeted from the summit on Saturday.

Treasury Secretary Janet Yellen says it will end a decadeslong “race to the bottom” that has seen corporate tax rates fall as tax havens sought to attract businesses that used clever accounting to take advantage of low rates in countries where they had little real activity.

Here's a look at key aspects of the tax deal:

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WHAT WAS THE PROBLEM?

In today's economy, multinationals can earn big profits from things like trademarks and intellectual property that are easier than factories to move. Companies can assign the earnings they generate to a subsidiary in a country where tax rates are very low.

Some countries compete for revenue by using rock-bottom rates to lure companies, attracting huge tax bases that generate large revenue even with tax rates only marginally above zero. Between 1985 and 2018, the global average corporate headline rate fell from 49% to 24%. By 2016, over half of all U.S. corporate profits...