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The US Treasury Department formally proposed a single minimum corporate tax rate of 15% for multinational companies to avoid global competition for the lowest rate.
The initiative was put forward at the OECD and G20 tax platforms, where proposals to harmonise corporate taxation have long been discussed. The French finance ministry, which supported the initiative, said the agreement must be reached quickly, no later than the G20 meeting in Italy in July, and could be finalised as early as autumn.
It should be noted that in the USA, the measure is being discussed as part of two fiscal packages involving an increase in government spending in exchange for an increase in the tax burden (and the partial cancellation of the tax reform carried out by Donald Trump).
Many countries now impose a higher level of taxation: in France the rate is set to fall to 25% by 2022, while the US has plans to raise the rate back from 21% to 28%. However, the rate is lower in Ireland, where many IT companies have their headquarters (12.5%, actually even lower), as well as in Hungary (9%). However, even Luxembourg, which traditionally has a more favourable tax rate, supported the initiative.
The initiative is primarily aimed at combating offshore jurisdictions, where traditionally the income tax rate for international business is 0%. The introduction of a minimum tax of 15% could certainly make the use of offshore jurisdictions less attractive, but only if the increased tax rate results in the need to actually pay tax on profits.
source: reuters.com
The initiative was put forward at the OECD and G20 tax platforms, where proposals to harmonise corporate taxation have long been discussed. The French finance ministry, which supported the initiative, said the agreement must be reached quickly, no later than the G20 meeting in Italy in July, and could be finalised as early as autumn.
It should be noted that in the USA, the measure is being discussed as part of two fiscal packages involving an increase in government spending in exchange for an increase in the tax burden (and the partial cancellation of the tax reform carried out by Donald Trump).
Many countries now impose a higher level of taxation: in France the rate is set to fall to 25% by 2022, while the US has plans to raise the rate back from 21% to 28%. However, the rate is lower in Ireland, where many IT companies have their headquarters (12.5%, actually even lower), as well as in Hungary (9%). However, even Luxembourg, which traditionally has a more favourable tax rate, supported the initiative.
The initiative is primarily aimed at combating offshore jurisdictions, where traditionally the income tax rate for international business is 0%. The introduction of a minimum tax of 15% could certainly make the use of offshore jurisdictions less attractive, but only if the increased tax rate results in the need to actually pay tax on profits.
source: reuters.com
