Band Leigh Thomas
PARIS, July 1 (Reuters) – Most of the countries negotiating a global overhaul of cross-border corporate taxation supported plans for new corporate tax place rules and a tax rate of at least 15%, they said on Thursday after two days of talks.
The Paris-based Organization for Economic Co-operation and Development, which hosted the talks, said a minimum global corporate tax of at least 15% could generate around $ 150 billion in additional global tax revenue each year. .
He said 130 countries, representing more than 90% of global GDP, had backed the deal during the talks.
New rules on where the largest multinationals are taxed would shift the rights to tax more than $ 100 billion in profits to countries where the profits are made, he added.
“With a global minimum tax in place, multinationals will no longer be able to pit countries against each other in an attempt to lower tax rates,” US President Joe Biden said in a statement.
“They will no longer be able to avoid paying their fair share by hiding profits generated in the United States, or any other country, in low-tax jurisdictions,” he said.
A source close to the talks said it took tough negotiations to get Beijing to rally. A U.S. administration official said there were no China-specific exclusions or exceptions in the deal.
The minimum corporate tax does not require countries to set their rates at the agreed floor, but gives other countries the right to apply a minimum top-up levy on corporate income from a country that has a rate inferior.
The Group of Seven advanced economies agreed in June on a minimum tax rate of at least 15%. The wider the deal will go to the Group of 20 major economies for political approval at a meeting in Venice next week.
Technical details are to be agreed by October so that the new rules can be implemented by 2023, according to a statement from countries that have backed the deal.
The nine countries that have not signed werethe Ireland, Estonia and Hungary, low tax EU members as well as Peru, Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya.
The holdouts risk becoming isolated because not only have all the major economies signed up, but also many well-known tax havens such as Bermuda, the Cayman Islands and the British Virgin Islands.
Irish Finance Minister Paschal Donohoe, whose country has attracted many big US tech companies with its 12.5% corporate tax rate, said he was “unable to join the consensus” , but that he would still try to find an outcome that he could support.
In the European Union, the deal will require the passage of a European law, most likely during the bloc’s French presidency in the first half of 2022, and this will require the unanimous support of all EU members.
Hailing the deal as the largest international tax deal in a century, French Finance Minister Bruno Le Maire said he would try to win over those who resist.
“I ask them to do everything to join this historic agreement which is widely supported by most countries,” he said, adding that all major digital companies would be covered by the agreement.
The new minimum tax rate of at least 15% would apply to companies with turnover above the 750 million euros ($ 889 million) threshold, with only the shipping industry exempt.
New corporate tax rules aim to distribute the right to tax their profits more equitably among countries because the emergence of digital commerce has made it possible for large tech companies to make profits in low-tax countries, regardless of where they made money.
The companies considered in the scope would be multinationals with a worldwide turnover of more than 20 billion euros and a pre-tax profit margin of more than 10%, the turnover threshold being able to be reduced to 10%. billion euros after seven years after an overhaul.
Extractive industries and regulated financial services should be excluded from the place of taxation rules for multinationals.
Implementation of the deal could still prove difficult in the US Congress, where Representative Kevin Brady, the top Republican on the US House Ways and Means Committee, described it as “a surrender. dangerous economy that sends American jobs overseas, undermines our economy, and removes our US tax base. “
($ 1 = 0.8437 euro)
(Reporting by Leigh Thomas; Additional reporting by Conor Humphries in Dublin, Andrea Shalal and David Lawder in Washington, edited by Andrew Heavens, Pravin Char, Timothy Heritage and Richard Chang)
(([email protected]; +33 1 4949 5143;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.