Friday, October 8, 2021

The OECD agreement will cost Ireland money
World companies are getting the minimum tax

In the summer, top economic powers agree to reform the international tax system. But not all members of the European Union are enthusiastic. But now the international community is securing an additional $ 150 billion in revenue – at the expense of Ireland, among other things.

After the former low tax country Ireland gave up, a major obstacle to global corporate tax reform was removed. After years of negotiations, at a meeting in Paris, the Organization for Economic Co-operation and Development (OECD) concluded technical negotiations with an agreement. Therefore, as the OECD declares, companies that are active internationally must pay at least 15 percent tax regardless of their headquarters. 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: companies that are active internationally should pay a “minimum” tax of 15 percent, regardless of their position. If a company with a subsidiary 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.

“Improving the Global Tax System”

The OECD estimates that $ 150 billion (approximately ബ 130 billion) is the lowest tax revenue in the world. “We have taken another important step towards a more reasonable tax cut,” said Federal Finance Minister Olaf Scholes. “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.” French Finance Minister Bruno Le Meyer spoke about an agreement that is essential to the economies of countries. “This agreement paves the way for a tax revolution.”

Biden tapped himself on the shoulder

U.S. President Joe Biden also attributed the agreement to “American leadership and diplomacy.” “For decades, American workers and taxpayers have valued a tax system that pays multinational corporations to shift jobs and profits abroad,” Biden said. “This race to the grassroots not only adversely affected American workers, but also led many of our allies to competitive shortcomings.”

The agreement also includes popular tax havens such as the Cayman Islands. 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 have their European headquarters in Ireland, thus avoiding further disputes with the G20 group of top financial powers.

Ireland is suffering huge losses

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 will affect 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 has also undergone a change, as announced by Estonian Prime Minister Kaja Kallas on Thursday evening. “We have been in intense discussions every summer to achieve a situation where this global tax does not affect Estonian entrepreneurs as much as possible,” Kalas said.