130 countries agree to global minimum tax rate
On Thursday 130 countries - China among them - signed off on a tax reform stipulating a global minimum tax of 15 percent for large companies, as recommended by the G7. It is aimed at reducing tax dumping and, according to the OECD, will result in 126 billion dollars of additional income annually. Only companies with an annual turnover of 750 million Euros will be affected. Europa's press is divided.
A milestone for multilateralism
The global tax reform is a huge step forward, says Handelsblatt:
“To understand what a colossal step has been taken, we must briefly review the last few years, which have been dogged by trade conflicts. The US and China launched themselves headlong into a trade war. And when countries like France wanted to introduce a national digital tax, the US threatened trade sanctions. The agreement on the global tax pact will put these disputes between the US and other countries firmly into the past. And put the US and China into the same boat. The tax accord will therefore not only ensure greater fiscal justice, it also marks a milestone for the multilateralism that had almost been given up for dead in the Trump era.”
An update against unfair competition
Jørn K. Broch, chief editor of Jydske Vestkysten's digital media, also applauds the decision:
“The biggest companies do in fact pay what they have to. Most of the time. But they simply have a broad range of options in a world where taxes are based on principles created before trade became global - and digital. This allows them to pay taxes where the rate is lowest, and there's always a tax haven somewhere. This means that competition is rigged from the start. And it also affects business life in your city. The world is large - but it's also small.”
A hindrance to fair competition
Les Echos is not impressed:
“The truth is that this reform could result in an incredibly complex taxation system which will not only negatively impact developed countries. Multinationals, which are currently capable of creating a lot of jobs in emerging countries that are deliberately luring them with tax incentives on their profits, will be less interested in setting up shop and expanding there once they have to pay the difference in taxes. Regulation should never kill fair competition. This also applies to taxes.”
Will the minimum rate become the standard rate?
It's too early to assess whether this tax is a good idea, says Kauppalehti:
“The 15 percent minimum tax could become a maximum tax rate. ... It could lead to a race to become the first country to cut corporate tax to 15 percent. Will it mean Finland can stick to its 20 percent corporate tax? The knock-on effects of the international tax reform are still largely speculative. Presumably, large countries and markets will benefit more than small technology-oriented and export-dependent countries like Finland. Meanwhile, there are only a few large companies in Finland to which the new tax model applies.”