According to one economist, the goal is to “fight tax competition between states.”

According to one economist, the goal is to "fight tax competition between states."

“The idea is that the countries of origin of multinational corporations have the power to tax their own multinational corporations.”, Francinefo Vincent Vicard, Head of Analysis, International Trade Program, Center for Prospective Studies and International Information (SEP), explained on Friday, June 4th.

>> LESS CORPORATION TAX: What do Ireland, Benelux and Switzerland think?

G7 Finance opened in London on Friday with the imposition of a global minimum corporate tax on the agenda, reviving the main idea by the administration of European President Joe Biden, which is receiving public support from major European powers.

franceinfo: What is the principle of this global minimum tax?

Vincent Vicard : To give multinational corporations the opportunity to tax their multinationals from the moment they do not levy adequate taxes abroad. Hence the importance of this minimum rate. Normally, a French company that has a subsidiary and pays 3 or 4% tax on the profits declared there, will have France reclaimed the right to tax the difference between this rate of 3% and 15%. % Or 21% depending on what is determined. On the one hand, it aims to discourage multinational corporations from artificially finding their profits in countries with very low taxes. And to discourage countries from drastically reducing tax rates. Because one of the goals is to fight tax competition between states.

So countries will be able to levy this tax. Will this only affect their national companies or all companies established on their soil?

The idea is that the countries of origin of multinational corporations have the power to tax their own multinational arrears. This is what is being discussed today. Moreover, the G7 countries discussed today are the origin of multinational companies. But there are other possible systems.

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If we talk about Gafam [Google, Apple, Facebook, Amazon et Microsoft]Does that mean the US is recovering the effects of this tax?

Yes. This will be the case for Gafam. We talk a lot about Gaffam because they are very profitable companies. Their tax plans, for example in Ireland, received a lot of media attention. But there are many other companies. Multinational companies of European descent also have tax exemption measures. So for European countries, the imposition of taxes on their own multinationals, which make a profit in other European countries and other European tax bases, would represent large sums.

Will this be a real step against tax evasion and tax evasion?

Yes, it will be a real breakthrough. You see, we are in a situation where there are significant threats to the tax system of multinational corporations, threats from tax evasion by multinational corporations, and threats from tax competition between states. The fact that the lowest taxpayer has a run. Therefore, this is a real opportunity for states to regain sovereignty in taxation and tax their multinational corporations, which is even more difficult today.

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