Put on the table by the US Treasury, welcomed by countries like France and Germany, and supported by the International Monetary Fund (IMF), the idea of establishing a global minimum tax rate on societies take shape.
This reform, which aims to put an end to tax competition between countries, will be on the menu of the virtual meeting of the G20’s major financiers on Wednesday, April 7, with perhaps the prospect of an agreement by the meeting of ministers. finance and central bankers of member countries on July 9 and 10. The idea, already promoted by the OECD, was recently adopted by the American Minister of Finance, Janet Yellen, while the Democratic administration, to finance a massive infrastructure plan, seeks to raise taxes in the United States. on companies that had been heavily lowered (from 35% to 21%) by Donald Trump.
A now realistic deal
This tax harmonization, intended to tax companies to a minimum regardless of the country where they are located, also aims to solve the long-standing problem of digital giants, who often practice tax optimization by establishing their headquarters where the rate tax is the lowest. The latter pay taxes often unrelated to the profits generated locally and appear to be the big winners of the pandemic.
The French Minister of the Economy, Bruno Le Maire, was delighted on Tuesday that a “Global agreement on international taxation is now within reach”, calling for “Seize this historic opportunity”. “We also hope to be able to move forward with Janet Yellen on the taxation of digital services in order to reach a global agreement at the level of the OECD next summer”, he added. Germany also welcomed this advance on Tuesday. German Finance Minister Olaf Scholz called it “Breakthrough” and judged “Now realistic that we agree this year”. As for the European Commission, it welcomes the comments of Mr.me Yellen, hoping they “Will give new impetus towards an agreement on a consensual global solution by the summer”. Commission spokesperson Daniel Ferrie assured the bloc was calling “All the global partners to remain engaged in these discussions and to continue the work without delay”.
Towards tax fairness
Janet Yellen said on Monday that the United States was working “With the G20 countries to agree on a minimum corporate tax rate”. The goal, according to her, is to “End this race to the bottom” to which countries are engaged by offering companies ever lower tax rates, to attract companies to their territory and guarantee them a competitive environment. The reform of this tax system thus concerns two aspects: the establishment of a world minimum rate and a system aiming to modulate the corporation tax according to the profits made in each country, regardless of their tax establishment. This last aspect particularly concerns multinational tech companies. The amount of the minimum rate envisaged is not official, and thresholds ranging from 12.5% to 21% have been mentioned.
For its part, the IMF supports the imposition of a minimum world tax on companies. Governments are faced with large-scale tax evasion and the transfer of money to tax havens, which “Worries us a lot” because that “Reduces the tax base on which governments can collect revenue and make necessary social and economic spending”, explained Gita Gopinath, chief economist of the IMF. States in search of resources to finance their gigantic stimulus packages know that they will not be able to count on low refinancing costs forever.