Days after 136 countries agreed on an international tax deal, a European Commission official announced that an EU directive to implement the minimum corporate tax rate could be released before the end of the year.
In a round table, Benjamin Angel, director of direct taxation and tax coordination at the Commission announced that the minimum corporate tax would be implemented at European level “as quickly as possible”.
The tax agreement concluded under the auspices of the Organization for Economic Co-operation and Development aims to reduce tax competition between countries and corporate tax avoidance.
The agreement contains two reforms of the global tax system. First, part of the profits of large companies should in the future be allocated to the jurisdictions where the income is generated instead of the head office of the companies. Second, it sets a minimum effective tax rate of 15% for large businesses.
If the implementation of the first part of the agreement is not expected in the coming months, the second part of the agreement could be implemented quickly.
Depending on how quickly the OECD releases its model rules on implementing the minimum corporate tax rate, the EU executive could come up with a directive before the end of the year, according to Angel.
He underlined the importance of implementing the agreement at European level rather than national level.
More tax transparency
Angel also announced that the Commission would accompany the directive with additional bill to ensure transparency. According to this proposal, companies falling under the minimum tax rate would have to publish the amount of effective tax they pay in each jurisdiction.
“The content of the directive will be extremely simple. The effective tax rate, which you need to calculate by jurisdiction, make it public, ”Angel said.
At the same time, the adoption of the tax agreement was endorsed by G20 finance ministers at a meeting in Washington DC on October 13. European Economic Commissioner Paolo Gentiloni called it “nothing less than a tax revolution”.
“The green and digital transition can only happen if it is based on equity. This reset of global corporate taxation is therefore a fundamental part of the change that we must see: everyone must pay their fair share, ”Gentiloni said in a statement.
Not all politicians share the enthusiasm for the deal. Paul Tang, a social democratic EU lawmaker complained that the deal was negotiated between governments without involving the public and said the minimum tax rate was too low.
“I hope 15% is just a starting point,” Tang said.
[Edited by Benjamin Fox]