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.
Leaders pose for a group photo before talks get underway in Rome. Photo: AFP
It follows concern that multinational companies are re-routing their profits through low tax jurisdictions.
The pact was agreed by all the leaders attending the G20 summit in Rome.
Climate change and Covid-19 are also on the agenda of the summit, which is bringing most leaders together face to face for the first time since the start of the pandemic.
The G20 group - made up of 19 countries and the European Union - is short by two leaders, however, with China's Xi Jinping and Russia's Vladimir Putin choosing to appear via video link, instead.
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.
The talks come amid increasingly dire warnings for the future if urgent action is not taken to cut emissions.
The G20 group is estimated to account for 80 percent of the world's carbon dioxide emissions.
Italy's Prime Minister Mario Draghi opened the two-day summit, telling world leaders that "going it alone is simply not an option. We must do all we can to overcome our differences".
"Multilateralism is the best answer to the problems we face today. In many ways it is the only possible answer," Draghi said in his opening statement.
Italy's Prime Minister Mario Draghi greets US President Joe Biden. Photo: AFP
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, saying it "will require meaningful and effective actions by all countries".
The draft also notes the need for "developed countries to mobilise $US100 billion ($NZ139bn) 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.
Photo: AFP
What else is on the agenda?
Covid-19: Vaccine equality is at the front and centre of many leaders' minds. Italian Prime Minister Mario Draghi said the fact just 3 percent of the more than six billion Covid-19 vaccine doses administered worldwide had gone to the poorest countries was "morally unacceptable".
He called on fellow leaders to "do all we can" to vaccinate 70 percent of the world's population by the middle of next year.
Iran: US President Joe Biden is due to hold meetings with Johnson, as well as France's Emmanuel Macron and Germany's outgoing Chancellor Angela Merkel, to discuss reviving the Iran nuclear accord. Talks with Tehran are due to restart next month.
-BBC