October 28, 2021

The Queens County Citizen

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The idea of ​​a minimum corporate tax rate is gaining momentum around the world

The idea of ​​a minimum corporate tax rate is gaining momentum around the world

With the support of the IMF, and placed on the US Treasury table appreciated by countries such as France and Germany, the possibility of establishing a minimum corporate tax rate worldwide is approaching.

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The reform, which aims to end tax competition between countries, will be on the menu of a virtual meeting of the G20’s chief financiers from Wednesday, with the agreement likely to be reached through a meeting of finance ministers and central bankers of member countries. On July 9th and 10th.

The idea, which has already been promoted by the OECD, was recently funded by the Democratic administration of U.S. Secretary of State Janet Yellen, who is funding a massive infrastructure plan, urging the U.S. to raise taxes on companies that Donald Trump severely insulted.

Amazon boss Jeff Bezos said Tuesday that he supports the tax increase in the United States, just days after Joe Biden complained that the group had not paid taxes on its profits.

“In 2019, 91, in an independent analysis, I emphasized, 91 (…) parts of the world’s largest companies, including Amazon, used various legal maneuvers and did not pay a single federal tax on profits,” lamented the American president.

This tax melody, which aims to reduce taxes regardless of the country where the companies are located, also aims to address the long-standing problem of digital giants who often practice tax optimization by establishing their headquarters where the tax rate is lowest. .

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Following the American proposal, French Finance Minister Bruno Le Maire on Tuesday welcomed the “global agreement on international taxes now available” and called for “seizing this historic opportunity”.

“We welcome United States support for a minimum corporate tax rate. We hope to work with Janet Yellen on taxing digital services to reach a global agreement at the OECD level next summer,” Mr Le Myre told AFP in a statement.

Germany also welcomed the progress on Tuesday, with the International Monetary Fund (IMF) announcing in favor of international tax reform, especially adapting to the digital age.

German Finance Minister Olaf Scholz called the US proposal “progress” and considered it “realistic now that we are agreeing for this year”.

The European Commission welcomed Ms Yellen’s remarks, saying they hoped it would “give new impetus to an agreement on a consensus global solution by the summer”. Commission spokesman Daniel Ferry called on “all global partners to engage in these discussions and continue to work without delay.”

Janet Yellen said Monday that “the United States is working with G20 countries to agree on a minimum corporate tax rate.”

According to her, the goal is to “end this race downward”, in which countries are engaged, offering companies higher tax rates to attract businesses to their territory and guarantee them a competitive environment. Are weak.

This version of the international tax system focuses on two things: the establishment of a global minimum rate and the system intended to modulate corporate taxation according to the profits of each country, regardless of their tax establishment, the latter category especially multinational technology companies.

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This minimum rate exceeding the minimum is unofficial, with limits ranging from 12.5% ​​to 21%.

The International Monetary Fund (IMF) also said on Tuesday it was in favor of imposing a minimum global corporate tax.

Geeta Gopinath explained that governments face large-scale tax evasion and transfers to tax havens, which “worries us a lot” because it “reduces the tax base on which governments can collect revenue and spend on social and economic needs”. Chief Economist of the IMF.

“Therefore we are in favor of a total minimum corporate tax,” she said.