US President Joe Biden’s plan to restructure corporate taxation does not really help countries in need of more tax money, say developing countries who want to have more international power.
The purpose of Washington can tax the world’s top 100 corporate profits from less or less real estate but earn more and can introduce global taxation, in an effort to end what they call “low competition” while businesses run profits through tax laws. low.
But companies pay a lot of taxes in the country they live in, and even their profits – and often the jobs and resources they use – come from developing countries, senior spies and hospitality groups told the Financial Times.
They are also concerned that many developing countries are not taking part in the OECD summit and fear that a subsequent agreement may not reflect their interests.
Mathew Gbonjubola, Nigeria’s ambassador to the OECD, said: “My understanding is… The laws that are developing are that the developing world will not take action.”
He acknowledged US and OECD efforts to find the world’s largest companies pay more taxes worldwide. “Developing countries that pay less, pay more for their services and rely on borrowing or support,” he said.
But he cautioned that “it is reasonable and prudent that developing countries, whether developing or developing, should have the right to reject the past. [tax revenue] goes to [companies’] living countries ”.
Gbonjubola added that the US “did not provide financial support” in the fight against only 100 companies. This also highlights the OECD’s vision, which would have benefited thousands of businesses.
Sybel Galván, Mexico’s ambassador to the OECD, said: “The most important factor between developing countries and developing countries is what determines how many companies are involved.”
Rajat Bansal, a member of the UN Committee of Experts on International Cooperation in Tax Matters, said setting up borders that only sell to large corporations would mean that “in the end, most taxpayers will not be available”.
Critics also claim that the amount of tax they pay according to the US plan is less because it should be less than half of the company’s profits. Ross Robertson, the world’s chief tax officer at the BDO, said: “If the whole pot is not big enough… It fails to provide the right rewards from foreign businesses. [developing countries’] areas that are benefiting from [their] metal. ”
The African Taxation Commission, which advises governments on contracts, has called for a way to coordinate the way borders are set at the bottom of the micro-economy. “We don’t think the same economic boundaries are all the same,” it said.
ATAF is also concerned that in the long and difficult negotiations the poorest nations will not be able to fight for their rights. “Even though they are in a chair, it is difficult for them to get close. . . There may not be much African political knowledge on the subject and its significance [the proposal] but. ”
Many of the world’s most prosperous economies are working with the UN to establish a global tax system, which would be particularly affected by the digital industry. The move comes as a result of small taxes paid by professional giants in the US in many high-income countries.
The system gives countries the right to pay taxes to digital companies based on their income, not just where the company resides. Argentina, India, Kenya and Nigeria have all paid digital taxes recently and many other African countries are considering this, according to ATAF.
The UN proposal, promoted by India and Argentina, was slightly approved by the UN tax committee last month. Other developing countries including Ecuador, Ghana, Liberia, Nigeria, Vietnam and Zambia have supported it.
The type is not binding and can be established in international conventions if the participating countries sign it, but the timing is critical for the OECD.
“There seems to be a strange competition between the UN and the OECD going on,” said Tove Maria Ryding, a spokeswoman for the European Network on Debt and Development. “The UN is looking at creating a digital labor tax and the OECD is trying to get rid of it” in favor of a government that can work in all industries.
Christian Hallum, a tax and marketing specialist at Oxfam Ibis in Copenhagen, said for some developing countries the feeling that they were being neglected in the OECD negotiations could cause them to hesitate to abandon their plans to go to the manufacturing industry, which could stop it. “There is a real danger that if rich countries dictate the consequences of [OECD] process, and what we will see. ”
Galván of Mexico says the OECD talks were “difficult but constructive” and many developing countries “were keen to forge a coalition. [tax] frame ”.
But others have warned that US sentiment is at risk of losing its legitimacy.
“You could say that the law is universal, but if the elections are not universal then why don’t the countries that have not participated in the signing of the laws?” Ryding said. “The poorest countries in the world are at risk of losing their international income tax, even though they need more taxes than anyone else.”