Global Minimum Tax for Businesses: Why It Is Prevented

Global Minimum Tax for Businesses: Why It Is Prevented

An agreement can be reached to reduce corporate tax evasion. But the last meters are the hardest. With a bit of drama, French Finance Minister Bruno Le Meyer said on October 5: “It simply came to our notice then. “

A Content.G7 states agree to force multinational companies to pay more taxes

France is one of the most committed countries to this reform. The agreement, which has been under discussion for ten years, aims to change the international rules for corporate taxation. There is a huge stake behind this technical debate. To combat the aggressive optimization practices of large companies is to end competition between states for the lowest tax bid.

The draft agreement has been on the table for several months. It was developed within the framework of the Organization for Economic Co-operation and Development (OECD), which brings developed countries together. He received the support of G7 heads of state and government in London last June. But the course of this sentence has not been completed.

A contract for October 30th

The meeting of the 139 states to be compromised will take place on Friday, October 8 in Paris. This should end the final technical proceedings. The text must be unanimously approved by the G20 Heads of State at the Rome Summit on October 30, before it can be submitted for public signature.

IN PREPARATION. “Tax competition between nations will no longer exist”

The project contains a number of revolutionary measures. It provides for the imposition of a minimum tax of 15% on profits. This means that no large company can afford to pay less wherever it is. This would eliminate the need for housing profit systems in subsidiaries located in tax-exempt countries such as Ireland.

Larger groups, especially those in the digital sector, will have to agree to levy taxes in the countries where their users are located, not where their offices are located. Here again, this is to prevent companies like Google or Facebook from evading taxes.

Technical barriers and political disagreements

Today’s barrier is related to technical details but the significance is heavy, threatening the whole discussion. Developed and developing countries oppose the right of redistribution of taxes to consumer countries. The United States wants to reduce this share to 20%. Large developing countries such as Turkey, India and Brazil need 30%. A compromise could rise to 25%.

Within the European Union, Ireland’s tremendous development of the economy has been based on economic competition for years, and it opposes the imposition of at least 15% tax to maintain its attractiveness. However, Dublin seems to be in the process of reviewing its position. Foreign Secretary Simon Coweny said he was there on Wednesday (October 5) “Good Hope” For his country to join the treaty, he added “I don’t want to be alone on this issue”.

Read. MNC tax: “International tax reform will benefit richest countries”

In addition, Poland and Hungary are fighting to protect the possibility of attracting investment by offering tax breaks. Both countries receive a “clipping” that allows companies with an industrial activity at home, employees, and clear assets (buildings, machinery, etc.) to be exempt from corporation tax.

Finally, China is struggling to ensure that its companies are not treated as large multinational corporations until they deploy in large foreign countries. They can get a temporary exemption before they fall under the common law.

By 2023, Europe will be able to apply the new rules

There are political barriers behind each of these technical conditions. The good originator of the discussion explains. In this case, one hundredth of a tenth, it has several billion tax revenues. Each state struggles to protect its economic model and its competitive achievements. That is why the final talks were the most difficult. “, Refers to the same source.

Facts. Europeans are looking for unity in the taxation of multinational corporations

If these final technical details can be resolved, the European Commission should translate the new rules into a proposal. It will be examined by the European Council in the first half of 2022. The unanimity of 27 is required, as is the case with all tax issues. If this timetable is respected, the new rules will come into force in Europe in 2023, making the European continent one of the first to implement reform.

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