130 states have agreed on a global minimum tax

130 states have agreed on a global minimum tax

The goal is to adapt the international tax system to the digital age and combat the phenomenon of tax havens. Initial revenue of 50-80 billion dollars expected

Janet Yellen (photo: Federal reserve) The world minimum tax is proceeding with great strides towards the G-20 of finance ministers and central bank governors of Venice, which it will be held from 8 to 11 July: it took just over 40 days to gather the consensus of 130 countries around the guidelines of the reform. Since the negotiations were released in May, with the proposal of a base rate of 15% by the United States, the Organization for Economic Cooperation and Development (OECD) has coordinated the negotiations up to the virtual meeting of Thursday. The group of 20 was fully represented among 130, including China and India who had previously expressed reservations about the initiative.

If implemented widely, the global minimum tax would put an end to the practice of multinationals seeking low-level jurisdictions. taxation and tax havens, such as Panama, the Cayman Islands or the Netherlands Antilles, where they move their offices, despite customers, executives and operations being elsewhere The OECD estimates that governments lose between $ 100 and $ 240 billion in tax avoidance every year. "The agreement between 130 countries representing over 90% of global GDP is a clear signal: the race to the bottom is a step closer to the end", said Janet Yellen, US Treasury Secretary, who stigmatizes competition between countries to attract companies with a generous tax.

The agreement comes on the basis of a pact already reached by the G7 in London, in June, and envisages two pillars in support of the reform, the combined effect of which would increase world revenues by 50-80 billion dollars, according to the OECD. The first pillar seeks to adapt the international tax system to the digital age, so that the placement of tax rights on business profits is no longer determined only by the physical presence of the company, as required by current regulations, but by the link between the distribution of useful, i.e. where consumer-oriented activities take place. In practice, where the businesses have customers and the companies make money by selling goods or services. In this case we are thinking of a 20% tax rate on profits exceeding the 10% margin, which each country could apply.

The second pillar addresses the challenges posed by the erosion of the tax base and the shifting of profits and is designed to ensure that international businesses pay a minimum level of taxes, no matter where they are based. This would be the part that would guarantee the greatest income and the 15% rate is just a starting point that was not mentioned in the agreement among the 130. Stomach aches are in fact very common in countries such as Ireland, Hungary, Estonia , Nigeria, Kenya, Peru and Sri Lanka. The knots should come to a head by October, when the G20 will put in black and white the details of the global minimum tax that should be triggered starting in 2023.

The agreement will include a framework of rules to eliminate taxes on the service digital technologies that have hit the major American tech companies in individual countries. Italy has so far known only “one edition” of the web tax, collected for the first time at the end of May.

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