Over the summer, the top economic powers agreed to a drastic reform of the international tax system. But not all members of the European Union were initially enthusiastic.
Dublin / Paris – A major obstacle to global corporate tax reform has been removed after Ireland, a formerly low-tax country, surrendered.
The Organization for Economic Co-operation and Development (OECD) technical negotiations ended after years of negotiations with the agreement at a meeting in Paris on Friday. Companies that are active internationally are required to pay at least 15 percent tax, regardless of their headquarters, as declared by the OECD. The regulation should come into effect from 2023. Of the 140 OECD members, only Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined.
In July, G20 finance ministers decided on two innovations: internationally active companies should pay “at least” 15 per cent tax wherever they are. If a subsidiary of a company pays less tax abroad, the home country can collect the difference. This is to prevent profits from turning into tax havens. In addition, large companies should be taxed not only in their home country but also where they do good business. The OECD expects the minimum tax alone to generate $ 150 billion (approximately ബ 130 billion) in additional tax revenue worldwide.
Scholes: An important step towards a fair tax
“We have taken another important step towards a more fair tax,” said Federal Reserve Minister Olaf Scholes (SPD). “In particular, the recognition of the states of the European Union is a great achievement and will ensure that this reform can be implemented expeditiously throughout the European Union.” Ursula von Der Lane, President of the European Commission, spoke about a historic moment. “This is an important step towards improving our global tax system.”
U.S. Treasury Secretary Janet Yellen hailed the deal as a generational achievement of economic diplomacy. “We have turned the tense discussions into decades of increased prosperity – for the United States and the world,” Yellen said after a statement from her ministry. Your French colleague Bruno Le Meyer talked about an essential agreement for the economy of the countries. “This agreement paves the way for a tax revolution.”
Popular tax havens such as the Cayman Islands are now included in the agreement. So did Ireland, which succumbed to international pressure just before the OECD agreement. A cabinet meeting in Dublin on Thursday evening decided to raise the tax rate on companies with a turnover of more than 750 million euros from 12.5 per cent to 15 per cent. Large digital corporations are avoiding further disputes with their European headquarters in Ireland and the G20 group of top financial powers.
Donohue: “This is the right decision.”
Dublin’s commitment became OECD intermediaries. Irish Finance Minister Pascal Donohue said it was a far-reaching reform of the global tax framework. “It’s the right decision. It’s a sensitive and practical decision.” In the EU country, the change is affecting dozens of companies with millions of employees, and is expected to take effect in 2023. The government of Dublin estimates its losses due to tax increases of between 800 million and 2 billion euros per year. In addition to Ireland, Estonia and Hungary from the EU have so far opposed the reform.
Estonia’s Prime Minister Kaja Kallas announced on Thursday evening that there would be a change in Estonia as well. “Every summer we have intense discussions to achieve a situation where this global tax does not affect the Estonian entrepreneurs as much as possible,” Callas said.
© dpa-infocom, dpa: 211008-99-531898 / 4
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