Twenty days of final knife negotiations, top-level diplomatic tensions, cross-appeals across the globe and tightrope tactics mediated by the Organization for Cooperation and Development (OECD): this was needed to give birth to a global minimum tax on the largest and most profitable multinationals which, at the start, few states wanted.
This Friday, October 8, the final draft which fixes the calibration of the very first tax rules cut out for the globalized economy is all set, down to the smallest detail. It could therefore be submitted, as planned, to the approval of the Heads of State and Government of the G20 (the 19 richest countries, plus the European Union) at the Rome summit, which is to be held on 30 and October 31.
The establishment of a global minimum rate, designed as a weapon against tax havens and dumping strategies, is the focal point of this reform. However, according to the compromise wrested by the OECD, it is set at 15%, with, underline the negotiators, “A robust base and limited exemptions”, and don’t forget any of the GAFA (the US tech giants Google, Apple, Facebook and Amazon).
With 136 signatory countries including the United States, China and India, rallied in extremis a few minutes before the formalization of the compromise, the agreement on the future tax reform unveiled Friday is truly global. Four countries are missing: Kenya, Nigeria, Pakistan and Sri Lanka. Ireland, Hungary and Estonia also signed late.
If it applies as planned by 2023, this minimum tax will bring 150 billion dollars (129 billion euros) into state coffers each year. A welcome resource for the planet’s public finances, suffocated by post-health crisis recovery plans. According to the International Monetary Fund (IMF), advanced countries spent, in 2020, the equivalent of 6% of their gross domestic product to support their economy.
Important concessions
Of course, important concessions have been made in order to get as many countries as possible on board the agreement with a view to reaching this compromise. Thus, on the rule, the slider of the world minimum tax stopped at 15%, therefore below the formula of “at least 15%” envisaged, which clearly left the door open to a future increase in the rate. . Transitional exemptions are foreseen, but limited in amount.
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