Important stage of negotiations in OECD ahead of G20

Negotiations continue this week at the OECD to find a consensus among the 139 countries involved, following the “historic” agreement in the G7 on global taxation of multinational companies.

The Organization for Economic Co-operation and Development (OECD), based in Paris and mandated by the G20 to establish a global minimum tax and better distribution of tax revenues from multinationals, especially digital, held a pivotal meeting on Wednesday and Thursday Is performed. To fix the general outline of the improvement.

The moment of truth will be a meeting of G20 finance ministers in Venice on July 9-10, paving the way for a final deal by the end of the year – or not.

“I believe we have never been so close to an agreement”, estimates Pascal Saint-Amans, the OECD’s tax mister, in mid-June.

“There is a dynamic (Joe) Biden who is extremely strong, the Europeans want a settlement. I think everyone knows that no agreement is better than no. Gafa tax, unilateral tax, US retaliatory measures”, he said on BFM Business believed. .

at least 15%

The reform is aimed at ending tax competition at a time when states have been spending massively to tackle the pandemic, when the digital giants in particular have become wealthy.

Under the US stimulus, the G7 in London outlined in early June the aim of a world tax rate on companies of “at least 15%” and a fair distribution of rights to tax profits. Multinational companies established in many countries.

An agreement of the Group of Seven Great Powers (United Kingdom, France, Italy, Canada, Japan, Germany, the United States) that was described as “historic” by Rishi Sunak, the Chancellor of the Exchequer, who presided over the meeting .

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It is now yet to extend the consensus to all the countries involved in the discussion.

However, the 15% rate proposed by the United States is not unanimous – including in the US Congress where Republicans oppose it.

Within the EU, some who have made tax competition one of their engines of attraction, such as Ireland or Hungary, have expressed their reluctance.

Poland, the long-refractory, extended its support to the project last week. A “decisive” endorsement greeted French Economy Minister Bruno Le Maire.

“Red line”

In the words of US Treasury Secretary Janet Yellen, convincing China, which has “concerns” about the project, will also be a challenge.

The Asian giant imposes lower corporate tax rates in some innovative activities and wants a minimum rate of no more than 15%, two sources involved in the talks told AFP.

The United Kingdom would like to exempt its financial sector from Pillar 1 of the Reform, which changes the allocation of taxing rights not only according to the place of tax establishment, but to the country where the business is realized.

Other points still need to be decided based on the future minimum tax or the number of companies that will be affected by the new distribution of tax rights.

The US proposal targets the top 100 MNCs. An insufficient number, estimated at the end of May, is the G24, an intergovernmental grouping that brings together 24 emerging countries, including Argentina, Brazil and India.

France also wants to ensure that all digital giants are affected by the reform. It is “a red line” to Paris, inscribed Bruno Le Maire.

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Questions have been raised about Amazon, whose part of its activities, such as distribution, is insufficiently profitable to fall within the ambit of Reform+, in contrast to Cloud+, an activity on which the US giant makes significant profits.

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About the Author: Forrest Morton

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