After months of pressure and negotiations, Ireland surrenders and the minimum tax for multinational corporations is 15% – green light from Estonia, agreement between 136 countries – global tax begins in 2023
There has been a historic turning point in the field of international taxation. Ireland joins the 15% global tax For multinational companies. Due to favorable tax and provisional agreements with many companies, the European tax haven is considered equal – which is why many U.S. high-tech giants, including Facebook, Google and Apple, have chosen it as their “home” – just a few days before the new G20 and the G20 scheduled for October 30-31 in Paris. Ireland has said yes to the minimum corporate tax agreement starting in 2023, with 130 countries already giving the green light.
Irish finance minister’s official announcement delayed Pascal DonohueAfter moving on from the Dublin government, he said: “This is a balance between our competitiveness and our position in the world. That said, he assured that Ireland would continue to be an attractive country for investment by international multinationals.
Global Tax: Agreement with Ireland
Dublin’s agreement came after years of pressure and months of negotiations between the OECD and several EU countries. In fact, since the 1980s, Ireland has applied very low tax rates to corporate income and profits, which has prompted many multinational companies to relocate their tax office to Dublin. The first was Apple, Microsoft, Intel, and in the 2000s Google’s parent companies, Facebook and Alphabet. In 1997, Ireland complied with EU state aid laws, raising its tax rate from 10% to 12.5%, but has since resisted pressure from other developed countries, which have long accused Dublin of being “competitive and unfair” in the tax sector. With the global tax convergence, the Irish defense seems to be over.
Under the terms, the Irish corporate tax will increase from 12.5% to 15% from 2023. The new rate will apply to companies with a turnover of more than 50 750 million, while the tax below this limit will remain at 12.5%. It is estimated that this change will affect 1,500 companies employing 400,000 workers in Ireland. The global tax will also affect the state treasury because, according to estimates, tax revenue will be reduced by $ 2 billion per year.
“This is a momentous and extremely positive step in Europe’s collective efforts to build a more equal and sustainable global tax system,” tweeted Paulo Gentiloni, the European Commissioner for Economy.
OK from Estonia
In EU countries that have not signed up Agreement last JulyIn addition to Ireland, there were Estonia and Hungary. A few hours away from Dublin, Tallinn also decided to surrender, giving the green light to the multinationals’ minimum tax: “We join the global tax treaty”, Premier Kaja Kallus announced, “nothing will change for most” Estonian financial operators, which will only affect branches of large multinational groups. At this point, only Victor Orban’s Hungary remains, but its membership is essential as the EU is unanimous on tax matters.
Global Tax: What the agreement promises
Once the Irish fortress collapses, the global tax treaty looks even closer. According to the forecasts, the contract can be signed G20 in the program in Washington At the OECD meeting on October 13 or at the end of the month.
The agreement, reached in Venice in July, is based on two cornerstones. The first involves the imposition of a 15% global minimum tax on multinational corporations with revenues in excess of 50 750 million. Simply put, if a company pays taxes in a country where the actual tax is less than 15%, the remaining percentage to reach this limit will have to be paid by the high-tech giants in suitable accommodation. The vast majority of cases go to the United States. It is expected to generate $ 150 billion annually from this amount. The second cornerstone is for multinational companies with revenues of over $ 20 billion and an operating margin of 10%. For them, a portion of the profits is equal to 20-30% of the profits in excess of 10%, in the countries where those companies make their sales, the tax of the office registered at any tax center. It is estimated to generate $ 100 billion in revenue annually.
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