Business

The G7 tax deal is a “starting point” for global reform


The tax deal agreed by the world’s leading powers this weekend is the first significant evidence of resumed international cooperation since President Biden returned the United States to the negotiating table. There is still a long way to go before it is realized.

“This is a starting point,” said French Finance Minister Bruno Le Maer, promising that “in the coming months we will fight to ensure that this minimum corporate tax rate is as high as possible.”

The agreement aims to close the gaps that multinational companies have used to reduce their tax bills by ensuring that they pay more in the countries where they operate.

The G7 ministers backed a global minimum wage of at least 15 percent, agreeing that countries should have the right to tax the profits of the largest, most profitable multinationals in certain parts of the country where they arise.

However, they still have a long way to go in the wider global negotiations between the 139 countries at the EC EC in Paris. The first obstacle to the G7 agreement is the support of the G20, which will meet in Venice next month.

Before the OECD: ratings: Bids can generate tax revenues of $ 50 to $ 80 billion a year, and the actual amount raised will vary greatly depending on the technical details of the final global agreement.

Two factors will have a special impact. The rate at which any minimum is set և Can the countries with the lowest levy it on income generated in non-user countries? The scale of the overall impact is particularly sensitive to this last point, known as the “mix of competencies” or “country by country charge”.

NGOs criticized the 15% threshold as too low. The IPPR think tank in the UK has stated that “this will not be enough to finish the race down”.

But University of California economist Gabriel Ucman, known for his work on tax havens, tweeted that the deal was “historic, inadequate and promising.” higher interest rate.

The lower interest rate “reduces incentives for multinational companies to make a profit in tax havens,” he said, but added that the minimum bite “could be country-by-country” as companies could otherwise use it elsewhere. to compensate for tax havens of more than one percent.

The G7 ministers and officials were concerned that their agreement did not mean that the world had agreed to the changes in international taxation, especially since the plan would eventually succeed. Instead, they saw it as an ambitious attempt to boost global negotiations.

It was accepted by other countries. Irish Finance Minister Pascal Donoho joined the G7 ministers in London, although he supported his country’s 12.5% ​​interest rate.

After the announcement, he wrote on Twitter: “I look forward to participating in the discussions now [the] “Any agreement that meets the needs of small and large countries, developed and developing.”

According to OECD estimates, an annual tax chart showing annual corporate tax reform.

Global negotiations must align countries’ competing priorities on two elements known as “pillars”.

The top priority for the UK, France and Italy is to ensure that the world’s largest companies, especially US digital giants Facebook, Google and Apple, pay more taxes in their countries, even if they have a small physical presence there. :

British Chancellor Rishi Sunak said the G7 agreement ensures that “the right companies pay the right places in the right places”, citing Pillar 1.

In contrast, US Secretary of the Treasury Ethanet Yellen did not mention this in his speech, focusing on the second pillar – the world minimum interest rate – “at least 15%.” This would generate more revenue for the federal government in Washington.

The first requires a global agreement և US legislation to be passed by Congress, and the second, which the EC EC estimates will generate more revenue, can be implemented unilaterally, but will work better if more countries are on board.

One pillar faces fierce opposition in Washington. France, Italy and the United Kingdom refuse to abolish their digital taxes until the United States passes legislation. Canadian Finance Minister Christia Freeland said after the announcement of the G7 agreement that her country intends to push for the introduction of a digital tax.

Beyond these fundamental issues, there remain many unanswered technical questions that can greatly differentiate the practical implications of the final agreement. Including which companies will be included in it և how to define the tax base.

“Although the pace of headlines is strong, the competition is likely to continue at the tax base level. This could be more confusing, “said Rita de la Feria, a professor of tax law at the University of Leeds.

Asked how he would sell the deal to US lawmakers, Yellen said it would “provide a certain level of corporate governance in the United States, around the world, an environment that is very volatile.”

And he greeted “Renaissance of Versatility”.

In particular, some ministers said the urgency of the G7 deal was to show that rich countries could still show the world that the 21st century would not be dominated by China.

The West is seeking to regain control of the global agenda four years after the Trump administration, when it was impossible, by concluding controversial political agreements, ministers said, both in public and in private.

“It simply came to our notice then [meeting] “It is a deep cooperation, a desire to coordinate and solve a much wider range of global issues,” Yellen said.



Source link

Related Articles

Leave a Reply

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

Back to top button