The World Corporation is one step ahead of tax reform

The US proposal to amend international corporate tax Good news. A split agreement will not only be a victory for multilateralism but will break the deadlock. Digital tax expands. It will also be a means of ensuring that companies visibly pay their fair share as the cure begins from a faithful epidemic.

A long-term review of the global corporation tax system embedded in international agreements is needed. It was created for an age when capital investment money was spent on physical resources such as factories or farms with a presence in a defined location. But it has also struggled with the rise of “intermediaries” wherever an organization decides where property can be. This has encouraged a “downward race”, with it Small countries Offering the lowest rates to attract multinationals.

US President Joe Biden’s latest proposal is based on the two pillars of the prosperous country’s thinking, economic cooperation and development. The first would establish “tax rights” for countries based on the sales portion of “consumer-facing” companies in their region. This would allow, among other things, European countries to impose more profits on US technology giants like Apple or Facebook.

The other column will create a new global minimum rate. Governments can claim that companies have kept their payments at the top until they reach this agreed level. This will prevent a “beggar-your neighbor” approach that could undermine the bidon administration’s efforts to fund social and infrastructural expenditures. High Domestic Corporation Tax – which could otherwise be moved further by the larger firms to tax shelters.

An agreement between the larger rich countries allows both Europeans and Americans to get what they want. This will enable Biden and his Treasury Secretary Janet Yellen to show that the hard edges of globalization can be made better by engaging with allies than the “America First” policy of its predecessor alone. Donald Trump An agreement is blockedIt is seen as an excuse to target US business in Europe. For their part, France and the United Kingdom have introduced new unilateral digital service tariffs; India is tightening taxes on foreign technology companies.

Europe should now accept the US offer and maximize the opportunity. As part of the agreement, the United States expressed its desire to extend the scope of the OECD package to all major international organizations. This could mean that European multinationals pay more, from German car manufacturers to French luxury goods manufacturers. Not only is it perfect to focus on the largest companies but it is also easy and in favor of moving the world in the right direction.

As a global low, the bidon administration’s proposed 21 percent rate is too high. A lower level of government would enable effective autonomy to set higher rates if desired, especially in lieu of new sales-based tax rates. Governments should not be tempted to view corporations as an endless source of politically advantageous tax revenue: in the end, all taxes raised from business are paid by consumers, shareholders or workers.

Nevertheless, economic gains should be made from a new international treaty. Global rules on how corporations should impose tariffs may reduce the incentive to engage in failed attempts to play the system. While corporate taxes are inherently perverse, businesses do not require a social license to operate; They depend on the government contributing to the services they provide. A world minimum corporation tax must reflect a compromise with these policies.

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