Since the beginning of the year, the global minimum tax on profits of large companies has come into force in many countries around the world. According to the Organization for Economic Co-operation and Development (OECD), this increases countries’ tax revenues by 9%, or $220 billion per year.
Nearly three years ago, 140 countries agreed to introduce a global minimum income tax on corporate profits. The agreement consists of two parts. First, the profits of multinationals with a turnover exceeding 750 million euros will be taxed in the countries where they are actually made and not where the company’s headquarters are located.
Second, countries set a minimum corporate income tax rate of 15%.
The minimum income tax has already come into force since the beginning of January in the European Union, Norway, Australia, South Korea, Japan and Canada. At the same time, countries that have joined the agreement, such as the United States and China, have not yet introduced the minimum tax, the Financial Times reports.
However, Pascal Saint-Amans, former head of taxation at the OECD, is optimistic about the implementation of the tax, as its implementation only requires the participation of a critical mass of countries. Countries that imposed the tax can collect it, depriving governments that did not impose it of tax revenue. This also motivates other countries to increase taxes.
“No one has found a silver bullet,” Saint-Amans said.
However, there are some peculiarities related to the imposition of the tax. In this way, at least initially, countries with the lowest tax rates before the agreement could benefit the most. Therefore, so far multinationals have considered Ireland, Luxembourg, the Netherlands, Switzerland and Barbados as tax havens where it made sense to relocate their headquarters.
Now, at least initially, these countries could benefit the most.
At the same time, Manal Corwin, current head of taxation at the OECD, believes that over time tax revenues will change from country to country and that the countries where the actual economic activity of companies takes place will benefit more in terms of long-term race.
Furthermore, according to the provisions of the agreement, companies will be able to receive various subsidies and deductions from countries in the future. For example, investments in tangible assets, i.e. factories and machinery, can be deducted from taxable profit.
Therefore, some experts believe that the minimum income tax may not bring additional revenue in the expected volume, and that tax competition between countries will remain in some form, although now it will be expressed not in low tax rates, but in subsidies and deductions .
2024-01-02 16:58:00
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