The global minimum tax will revolutionize international taxation

The global minimum tax will revolutionize international taxation

The G7 concluded on Saturday with a historic agreement leading to major tax reforms. Tax justice will be strengthened.

The G7 members, the United States, Canada, Great Britain, Canada, France, Italy, Japan and Germany, have finally agreed to resist raising the global minimum tax to 15%.

In later years people will be able to see the light of day, and this will help them to fight effectively against dumping and tax evasion. The current international system now allows many multinational companies to pay very little tax. How? What is ‘or’? By establishing in countries with inferior tax rates (Ireland, Hungary, etc.). For example, Facebook, Amazon, Apple and even Netflix paid the average 3.6% tax in 2020. What is the 28% tax levied on young companies in France …

With a global minimum tax, it would be a completely different story. If this is not respected, the difference between the minimum rate (15%) practiced by the country of origin of a company will be recovered, and the company will work in the tax-paying country. In practice, this means that if a French company levies a 10% tax on a tax facility, it will have to pay an additional 5% to the French tax authorities.

The tax was turned upside down by the lowest tax

We understand that the amounts at risk are very large. According to the European Tax Observatory, the 15% rate will allow the EU to receive 50 billion euros in the treasury, including the French government’s 4.3 billion.

Finance Minister Bruno Le Meyer naturally welcomed the agreement reached at the G7 in London this weekend. However, he said he would continue to press for an increase in the agreed rate. At historically high tax rates, France will benefit from a higher rate: 25% to $ 26.1 billion a year. The United States also sided with France, with President Joe Biden initially raising the rate to 21%.

See also  "Cabaret de l'Exile - Irish Travellers" by Bartabas: A Beautiful Journey by Le Masque

It was revised downwards as the project slipped. The idea of ​​a global minimum tax, a real sea snake, had in fact been regularly raised in public debate for 4 years, but without significant progress. Meanwhile, Kovid-19 was there. The treasuries, which had been emptied due to the health crisis and stimulus measures, wanted the states to end the bailout crisis as soon as possible.

America is the leader of this tax revolution

The global minimum tax actually gave Washington a new lease of life. U.S. Treasury Secretary Janet Yellen is proposing a minimum 15% rate this year. She wants to avoid relocation because of the increase in corporate tax rates in her country (from 21 percent today to 28 percent). They argue that the minimum tax will replace digital European taxes that mainly affect American companies.

The G7 agreement aims to prevent the spread of digital taxes around the world. In addition to the minimum global tax, he proposes to introduce a new tax that worries large companies with a dividend of at least 10%, so it will eventually pay off for the web giants.

To this extent, the G7 tax in London this weekend is a crucial stage in the emergence of “adapting to the global digital age”, to use the text of British Finance Minister ish Shi Sunak. Before daylight can be seen in a timely manner, the measures promoted by the G7 must still be approved by the G20 and eventually approved by the OECD, which brings together 139 countries.

Details will be provided in the G20 in July as there are many uncertainties. In particular, the income threshold of the companies concerned should be defined. Also, refractory sounds can be heard. Beneficiaries of the minimum tax are in fact developing countries applying a beneficial tax system to boost their economies. As Lison Rehbinder pointed out, NCO expert on international taxation within CCFD-Terre Solidarity “Ground rate is very low and rich countries form the lion’s share. The G7 agreement is an agreement between rich countries.

See also  "Sons of Philadelphia" on the Canal + with Matthias Schonerts and Joel Kinnaman

Written By
More from Harding Hansen
Favorite Netflix series ends after season 3 – Marseille News
Netflix’s Derry Girls’ fans received bitter news when showrunner Lisa McGee announced...
Read More
Leave a comment

Your email address will not be published. Required fields are marked *