Nearshore Forum: What OECD Global Corporate Tax Reform Means for Nearshore

Earlier this year, more than 130 countries signed a global agreement on corporate tax reform, led by the OECD, to force international organizations to pay their fair share of taxes, set at at least 15%.

Digitization and globalization of the world have created a mismatch between businesses and tax systems. Many large companies producing intangible goods such as software have, over the past 30 years, transferred their income to low-tax countries and have managed to avoid paying taxes in their home country.

For example, in 2019, Google UK reportedly generated revenue 1.6 billion pounds (about $ 2.2 billion) but only paid 44 million pounds (about $ 60.6 million) in taxes.

Globally, the average corporate tax has fallen dramatically in recent years. According to the Tax Foundation, the average corporate tax rate among the countries of the world was 40.11%. This figure has almost halved to 23.85% by 2020.

For the nearshore market, the OECD’s global tax reform could help propel economic growth by ensuring that some of the world’s largest companies pay taxes where they operate.

The The IMF reported In 2018, tax havens cost governments up to US $ 600 billion in lost tax revenue. Of this figure, “low-income economies represent some US $ 200 billion,” more than the US $ 150 that low-income countries receive in foreign aid.

Nearshore Americas spoke to Monserrat Colín, tax partner of an audit, consulting and tax firm JA Del Río, to learn more about the revolutionary reform. Monserrat provided a general explanation of the key points of the reform and told us how Mexico is approaching change.

She explained how the reform will aim to tackle Base Erosion and Profit Sharing (BEPS), the plan’s two-pillar approach and the potential timeline for change.

Source link

Previous U.S. stocks close due to corporate tax hike
Next Redefining the corporate governance of the red line-Nana Otuo Siribour II