Tribune. Global crises often pave the way for major reforms. The agreements that regulate the monetary system and world trade were concluded following the Second World War. The main features of the current corporate tax system date back a century. Today, the consequences of Covid-19 have given new impetus to the reform of this system.
The bill for dealing with the emergency and rebuilding our economies will amount to trillions of euros. There is a strong demand for everyone – and especially the companies that have benefited so well from the acceleration of digitization brought about by containment – to pay their fair share. It is also essential for other reforms and investments linked to the climate transition.
A breath of fresh air after Trump
But the impact of the crisis would not have been enough to launch global tax reform without the position adopted by the United States. Washington’s firm and constructive commitment, expressed by Treasury Secretary Janet Yellen at the G7 in London on June 5, and in other discussions that have taken place virtually over the past few months, has been a breath of fresh air charges after the obstruction of the Trump administration. It has been one of the most striking and appreciated signs of the return of the United States to a multilateral vision.
The G7 Finance agreement covers on the allocation of taxing rights to the world’s largest and most profitable multinationals. They will pay taxes where their profits are made, not just where their headquarters are. The G7 agreed that countries should be able to tax at least 20% of the profits (beyond a 10% margin) made by these companies from activities carried out in their territory. Regarding minimum taxation at the global level, an agreement has been reached on an effective rate of at least 15% country by country. The G7 also stressed that an agreement should be reached in parallel on these two pillars and pledged to work in this direction at the next meeting of G20 finance ministers and central bank governors, which will take place in Venice July 9 and 10.
Taxes on digital services
Agreement was also reached on what has been a major source of transatlantic contention: the future of taxes on digital services, introduced in recent years in several European countries. It is necessary to ensure “Appropriate coordination” between the application of the new international tax rules and the abolition of these taxes, as well as other relevant similar measures, in respect of all enterprises.
You have 41.85% of this article to read. The rest is for subscribers only.