A dissenting voice in the excitement around him. On Tuesday, May 25, Ireland rejected a proposal by the United States five days ago to impose a 15% minimum tax on the profits of multinational corporations. The Irish finance minister indicated that his country did not intend to increase its own legal rate, which is one of the lowest in the world today, at only 12.5%. What sparks the plan cycles when the island remains the hub of tax optimization strategies in Europe? In fact, the country has no way of preventing the implementation of the device or escaping its consequences.
The Minimum Tax Project aims to prevent multinational corporations from tax evasion, which reduces their contribution by finding their profits in favorable tax-imposing countries. ” these [dernières] Currently, a handful of tax bases are making huge profits, most notably Ireland, Luxembourg, the Netherlands, Singapore, Hong Kong and Bermuda. Berkeley Gabriel Sukman is an economist and professor at a forum in May 2018. Published by Echoing.
Determining the minimum tax will create a waterline below which these groups cannot descend. It will therefore replace the lower floors and rebates currently implemented by tax sites. With two expected consequences: increase the revenue of other states and prevent tax competition, which includes tax cuts in the hope of attracting businesses. With a high enough world minimum, ” Companies will no longer be interested in registering their profits at tax sites (…). A race for the best tax dollar will begin “Gabriel Sukman said again last April, this time Marion. The tax rate has been declining for the past 20 years: the average legal rate has dropped from 32.2 percent in 2000 to 23.2 percent in 2020. In the OECD.
“Ireland has no special needs”
What happens if tax-cutting countries refuse to deploy? Discussed at the OECD and re-launched by Joe Biden, the system provides exactly what they need to overcome their low tax rates. The signatory states will authorize companies based on their soil to impose additional taxes and fill the 15% gap. Example: If an American company pays 5% for profits made in another country, the United States will reduce the missing 10% from the parent company. In the event that the multinational headquarters itself is based on a tax base, a security net will still be able to recover all parts of the difference by imposing a tax on transfers between subsidiaries.
Result: Even if Ireland continues for years, the United States and other great powers will not levy adequate taxes on the island under this device. ” Because the principle is to differentiate between local rates and what is considered normal at the international level, Americans do not particularly need Ireland to implement it. »Summarizes Damien Browsell, Lecturer in Economics at the University of Strasbourg. Especially since According to the roadmap established by the OECD, The device can be adopted by amending national laws, which should not interfere with existing tax treaties between countries. “ I do not see how countries can prevent 15% in these circumstances തിയ Concludes Theory Lambert, Professor of Law at the University of Ix-Marseille.
As a last resort, Ireland may try to rely on European agreements. Because of European justice In the past it was divided As a result of institutional independence, a state can only attack profits from another member state on one condition: that the company concerned establishes a “place in this second area”. Completely artificial assembly , Without doing any actual work there. What can prevent companies based in Ireland from applying the future minimum rate to France? “ This is a completely open question, By Alexander Mitrot de la Mote, professor of law at the University of Paris-Est-Cretail. The European Union Court of Justice’s case law has evolved somewhat, leaving behind the possibility of going one way or the other in its latest decisions. “However, such a restriction would only apply to European countries, not the United States, and would not protect the profits of American multinationals based in Ireland.”
Aspirations revised downwards
Instead of the end of the permit, Ireland’s declaration seems to be an attempt to influence the negotiations. ” This is similar to a record fight, trying to achieve the lowest possible rate by realizing that in the end the country will not emerge victorious. Ireland could see more weight in this direction if it appears to be the leader of a group of refractory states. », Damien Brow analyzes the sol. The French finance minister is confident of the ability of the great powers to overcome hostility: I believe in the power of these signals sent by the most developed economy on the planet. If the G7 and G20 adopt this new international tax regime, there will clearly be resistance and it will be difficult to maintain it. Mayor of Bruno announced on Thursday, May 27th France Inter.
Moreover, the plan has already been revised in favor of Ireland. This is because the US executive first proposed a rate of 21%, before lowering it to the 15% mentioned today. This is very close to 12.5% Irish: ” With the first rate, companies no longer have a tax reason to set up in Ireland, and the second is disappointing », Alexander Mitrot de la Motte Emp. So does this decline question the minimum interest? ” Of course, the desire is very low. But the fact that it already exists will not only succeed, but will end the overall decline in rates. », Damien Browse calculates the sol. The Economic Analysis Council notes Published in 2019, The international minimum of 15% will already increase corporate tax revenue in France by 15%, if Ireland and others do not agree. This tax brought in 31 31.5 billion in 2019.
Also read:Tax Stations: With Joe Biden, World Minimum Tax… “Made in the USA”?