The finances of the Group of Seven (the United Kingdom, France, Germany, Italy, the United States, Canada and Japan) opened in London on Friday, June 4, and the draft US tax floor was revived by the administration of US President Joe Biden. Americans set a minimum corporate tax rate of 21% before deciding to get 15% more votes. While the G7 has strong support for this project, which Paris has been craving for years, other countries are less enthusiastic. rethinking.
Ireland agrees if we accept the tax rate as a lower rate
The tax reform that Joe Biden wants will have a huge impact, particularly in Ireland, where corporate tax rates are low. The idea of a 15% global tax threatens the country’s attractiveness. It’s worth noting that after the tax optimization, most of Dublin’s digital giants pay less than 10%, or even 0% in some, while Ireland welcomes their business at 12.5%. cases. According to the British newspaper sponsorLast year, the Irish tax system did not tax US company Microsoft on $26.260 billion in profits from one of its subsidiaries, or three-quarters of Ireland’s gross domestic product.
So this deficit is huge in the treasury, yet the Irish government is against the global tax scheme because it would deter companies and cause a loss of $2 billion. Euro in tax revenue per year. On the topic of support for this initiative, Treasury Secretary Pascal Donoghue gave an interview to the British Channel. schoolnieuws. “We are concerned about the level of taxes that only large countries and larger economies can benefit from. I am proud that our rates have enabled a country as large as ours to grow. Economy!”. Pascal Donoghue proposes the Irish tax level as the minimum rate for this global tax. His position is essential in Europe: the Irish finance minister will chair the Eurogroup until the end of 2022.
Belgium, the Netherlands and Luxembourg restore their image if necessary
The Benelux countries are quasi-tax havens for companies in the three categories; Belgium complies with tax rules, these are prior agreements with companies with the aim of taxing and attracting companies; But above all, Holland and Luxembourg became the champions of this training. For these countries, a minimum corporate tax system would weaken well-established and highly profitable tax systems.
The discovery of several financial frauds taxing multinational corporations is now forcing these countries to apply the principle of global minimum taxation to improve their image. If we trust the Batavian authorities, their goal is that the name of the Netherlands does not appear in the list of tax havens. “We can’t stop the deal. “ The tax was introduced all over the world, says Hans Wigobrev, now finance minister. The Netherlands has made a name for itself in the news by revealing the Paradise Papers: If Nike can hide billions of euros for Bermuda from US tax authorities via Bermuda, it will be due to the fact that the Dutch people have collected European income from various European tax authorities. On behalf of the competing authorities, the European Commission has already ruled that a tax ruling given to Dutch company Starbucks is illegal. The European Union, the jewel in the Dutch crown, was added to the list of tax havens two years ago, becoming the first tax rule indirectly linked to the European Union. The protest of Dutch citizens to demand more tax justice changed the position of the Batavian authorities.
For Luxembourg, the concern is no longer about crossed hair. Luxembourg has been a global financial center since 1960, and today the Grand Duchy receives four trillion foreign direct investment, or six million euros for every Luxembourg citizen. Luxury Lakes exists to prevent some multinational corporations from moving away from a tax level of less than 1 percent if the official corporate tax rate goes up. Luxembourg has modified its tax policy. 24%. Openlux’s results in February show that there are still gray areas in the tax system in the Grand Duchy and that the Luxembourg government is now willing to accept a deal if it establishes common rules of will.
Switzerland is not worried if the rate remains at 15%.
There is one country in Europe that is following the discussion about the minimum corporate tax: Switzerland. The cradle of banking secrecy is the tax base for multinational corporations. It is a fact that Switzerland has one of the lowest corporate tax rates in the world. Here the prices are as high as the cantons in the country.
In detail, businesses pay an 8.5% flat federal tax. But each local government – along with the 26 governments in Switzerland – decides how much they want to implement. For example, the canton of Nidwaldon adds a 5.1% tax. This makes it one of the most attractive regions in the world for companies from a financial point of view on the same level as Hong Kong. The total corporate tax rate in Switzerland ranges from 11% to 21%. From this point of view, Switzerland can be compared to Ireland in Europe.
Joe Biden recently described Switzerland as a “tax haven” and said his idea of creating a minimum tax risk for global companies would be harmful to the country and reduce it strategically. The country has always attracted large companies. With many tax advantages. That has already changed in recent years under pressure from the European Union, Switzerland’s largest trading partner. For example, before 2020, you should know that multinational companies have paid lower taxes than small and medium-sized businesses in Switzerland. This is no longer the case. The minimum tax rate we are talking about is 15%. Or the average observed in Switzerland. So this move should not lead to the migration of large companies. As Joe Biden initially noted, things would be different if the tax were more than 20 percent.