The agreement on the principles established at the last meeting of the G7, a group that integrates the largest developed economies, is an important step towards tax reform for large multinational corporations, which today is benefiting from system failures.
The changes will be based on two pillars. The first is to impose a minimum tax of 15% on corporate profits, which applies to all countries. The aim is to reverse the trend of tax breaks seen in recent decades as a result of disputes with investments.
Through uncoordinated movements, each country sought to maximize their position, eventually losing all revenue as companies intensified their search for more favorable tax housing.
The second pillar is the attempt to pay more taxes not only where large multinational companies are headquartered, but also where they do business.
The problem with businesses paying taxes is that in the coming decades the digital and dematerialized economy will grow, eroding the national tax base.
Revenue figures are still unclear, but a study by the Organization for Economic Co-operation and Development (OECD) estimates a 4% increase, equivalent to $ 84 billion a year, to be paid by most American companies.
The deal is only possible because of the greater willingness of the United States to allow technology giants to impose taxes. The necessary response is the end of other countries’ efforts, such as France, to unilaterally impose a digital tax.
The U.S. is also interested in the minimum global tax, and now the Democratic administration wants to increase its own charge (from the current 21 percent to 28 percent) to pay for increased spending on infrastructure without losing competitiveness.
The new rules have yet to be clarified and it is not clear which companies will be affected. It is also necessary to include developing countries, and the issue will be on the agenda of the next G20 meeting in July. Then comes a lengthy process of national recognition.
It is likely to move forward but there are criticisms. The important thing is that at least 15% is inadequate, and that the current system of Ireland, the Netherlands, Singapore and the tax base surpass the rates of the most exploited countries. Another is that the biggest beneficiaries of the biggest fundraisers will be the governments of rich countries.
It is undisputed that globalization has the potential to provide more tax justice if changes are well controlled.