Which has never happened before. Earthquake. Changes around the world. G7 economists raised the bar as they celebrated Saturday corporate tax agreement. After about ten conversations, it’s a very bold process. But expectations for higher taxes have not materialized.
This union has two parts. One seeks to counter competition from the bottom line by forcing a large corporation with lower taxes worldwide. The second category requires large, highly profitable companies to pay taxes to the countries where they sell. One-fifth of their global profit over 10% will be redistributed as follows.
Big companies need to be prepared to pay their taxes. But how much? Big numbers are circling. EU countries have to pay around € 50bn or 15% More taxes worldwide, according to the EU Tax Observatory in Paris. Similarly, the UK will take the file of an additional £ 7.9bn, according to the IPPR-tank.
Such figures appear to be excessive. Developing the old OECD reasoning indicating a surplus of less than 4% or $ 84bn. The largest share is provided by tech giants in the US and various other countries. Weak laws to prevent evasion make it easier to transfer profits to tax havens than companies located elsewhere.
The second category will cost companies less – especially $ 12bn or 0.5% in global taxes. Some reputable companies such as Amazon, which have a higher turnover of 7.5%, may be inadequate at all. But the measure is important though, as it would allow for a $ 100bn tax to be exchanged between countries.
The US runs a large portion of the bill on this. Its companies represent 72% of the profits of the 100 most profitable countries in the world, according to Taxes. This makes it difficult to reach an agreement through Congress.
The tax system should be seen as a huge profit. In exchange for major taxes on US imports, Washington receives international taxes. This would allow the US to increase corporate taxes without fear of being monitored by other countries. It also encourages the UK, Italy and others to abandon their digital taxes. Repeatedly, the US withdrew threatening tax evasion.
The enjoyment of a long-awaited long-term agreement can only be justified if it avoids tax and business expenses.
Lex’s team wants to hear more from readers. Please let us know what you think of the international agreement on corporate taxes in the comments section below.
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