The 15% global tax share of the big multinationals is not equivalent

La taxe mondiale à 15 % des grandes multinationales n

The historic agreement reached on July 1 by the 131 countries, comprising not less than 90 percent of world GDP, was achieved through its most symbolic action. 15% of companies with a turnover of at least 750 million euros. There are about a hundred in the world.
Following the approval of the 20th Group Presidents ‘and Prime Ministers’ Meeting in Rome on October 30 and 31 – a formality other than an impossible reversal – this agreement will be included in their legal arsenal for the signatories. Its implementation is scheduled for 2023.
This is how Daniel Cohen, president of the historic and iconic Paris School of Economics, describes the deal.

How historic is this agreement?

We have been waiting a long time for such an agreement to limit the tax evasion of multinational companies that is legally and transparently but hypocritically organized. Sending patents to Ireland makes it possible to justify a transfer that assumes that most of their profits will be rewarded, which is a good example. International cooperation is the first to enable large countries to adopt minimum taxation. This is a lesson of humility for Europe, which has never succeeded within common borders. It should be noted, however, that its signature is first and foremost committed to overcoming the health and financial crisis. Here, too, the power of the symbol is greater than the amount of funds raised, and ultimately not so important.

Is this the end of tax havens?

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The lowest global tax is, in fact, an effective way to eliminate tax havens such as the Bahamas or the Cayman Islands. The mechanism is simple: if a company lives in a tax haven and pays nothing, the registered country has the right to collect 15% of the profits from the tax base. In other words, multinational corporations have the right to substitute up to 15% tax-deductible countries for low-tax or non-taxable countries.

Is this rate too high to offset the attractiveness of low tax countries?

For countries that are building their competitiveness on low corporate taxes, rather than tax havens, this increase is symbolic because it is only a few points. In Europe, the situation is similar in Ireland, which levies a 12.5% ​​tax, and Hungary, which is 9%. On the other hand, for Estonia, where taxes are levied only on dividends, the bar is high. In most rich countries, corporate taxes are much higher.

So is a higher minimum rate desirable or possible?

It’s hard for me to understand that a very high rate was not maintained. The decision would have required the top 10 richest nations to have given 25% consent. There is no doubt that we did not want to keep Ireland away by asking for only a small effort. Initially, the US offered 21%. France and Germany followed. But, amid psychological breaks and political setbacks, discussions within the OECD quickly revised this rate. Yet wouldn’t a deal at 25% be extraordinary or revolutionary ?!

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Will ecology be marketed?

Do public debt justify higher rates, which have deepened the global health crisis?

There is no doubt that the search for consensus was more successful than the quest for efficiency. It is not at such a rate that we pay off the debt accumulated in twenty years by levying a lower tax on capital and move into a more redistributed world. But the signal sent is good. This rate stops funding. Moreover, according to the OECD, this global minimum tax rate of 15% will bring in additional tax revenue of $ 150 billion annually globally. More specifically, according to the OECD again, it makes it possible for companies in the countries where they do business to distribute more than $ 100 billion in taxes equally to profits.

Organization for Development and Economic Cooperation

Jerome Pillere

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