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Taxing Multinational Corporations: Towards a White Smoke from G-20 Financing

Taxing Multinational Corporations: Towards a White Smoke from G-20 Financing

a prioriThe green light from the nineteen richest countries in the world and the European Union appears to have been obtained: they have all already adhered to the general framework of reform negotiated on July 1 under the auspices of Development and Economic Cooperation (OECD), including China and India.

Italian Economy Minister Daniele Franco, whose country is chairing the G20, announced himself reliable Regarding the chances of conclusion political agreement in Venice that A radical change in the current structure of international taxation.

Behind the scenes negotiations continue to mobilize rebellious states such as Hungary, Ireland and Estonia that play spoilers and are reluctant to ratify the global minimum corporate tax rate. at least 15% set forth in the agreement.

Keen to maintain their status as a tax haven to attract investment, they post lower rates – 9% for Hungary and 12.5% ​​for Ireland – or, in practice, only tax dividends, as in Estonia.

However, the mobilization of these three European countries is necessary for the European Union, since the adoption of a minimum tax under a European directive requires the unanimity of the members of the Union.

Taxes in all countries

The other part of the agreement, which plans to tax companies where they make their sales and not just where they are domiciled, is less controversial. It aims at a better distribution of tax revenue among the countries concerned.

Its goal: to prevent multinational companies and especially GAFA (Google, Amazon, Facebook and Apple), which have benefited greatly from the coronavirus pandemic and booking, from paying exorbitant taxes in relation to their income.

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Once this new tax system is in place, around 2023, the national digital taxes imposed by France, Italy or Spain will now be doomed to disappear.

However, the European Union plans to soon announce its own digital taxes that are supposed to fund the 750 billion euro recovery plan, a project opposed by Washington, which it sees as a discriminatory measure against US tech giants.

Moreover, this European project can Completely derailed Washington has warned of ongoing international negotiations on tax reform.

The first agreement at the G7 in early June in London gave a boost to negotiations, faltered during Donald Trump’s presidency and revived with the arrival of Joe Biden in the White House.

Joe Biden has brought the United States back to the center of global politics, with a multilateral strategy that made a critical contribution to the dealStefano Caselli, professor of finance and international affairs at Bocconi University, told AFP.

This is certainly a historic agreement, but it is only the beginning of the road Noting the effective implementation of reform.

An obstacle course, especially in the US Congress where Joe Biden has only a shaky majority and where Republicans stand against reform.

Keep in mind that the agreement has to be approved by the parliaments of different countries. Some difficulties are to be expected, especially in the United StatesGiuliano Nossi, professor of strategy at the Polytechnic School of Milan, told AFP.

For many emerging countries, the agreement is not ambitious enough. Argentina, a member of the G24, an intergovernmental group that also includes Brazil and India, had demanded a rate of at least 21%, or even 25%, before joining the OECD declaration.

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Mr. Nosi thinks it will be difficult to move forward. This is indeed a very important result. But the devil is in the details. We will have to wait for the executive decrees to assess the true scope of the agreement.

G-20 discussions should also focus on the global recovery after COVID, inflation risks, climate change, and aid for poor countries.