Global Deal to End Tax Havens Moves Ahead as Nations Back 15% Rate

[BumRushDaShow]

Source: New York Times

More than 130 nations agreed on Friday to a sweeping overhaul of international tax rules, with officials backing a 15 percent global minimum tax and other changes aimed at cracking down on tax havens that have drained countries of much-needed revenue. The Organization for Economic Cooperation and Development, which has been leading the negotiations, said 136 countries and jurisdictions had signed on to the deal. “Today’s agreement will make our international tax arrangements fairer and work better,” Mathias Cormann, the organization’s secretary general, said in a statement. “We must now work swiftly and diligently to ensure the effective implementation of this major reform.”

The agreement is the culmination of years of fraught negotiations that were revived this year after President Biden took office and renewed the United States’ commitment to multilateralism. Finance ministers have been racing to finalize the agreement, which they hope will reverse a decades-long race to the bottom of corporate tax rates that have encouraged companies to shift profits to low-tax jurisdictions, depriving nations of money they need to build new infrastructure and combat global health crises. On Friday, Hungary, which had sought sweeter terms, agreed to back the new tax, joining two other important holdouts, Ireland and Estonia, which ratified the deal on Thursday.

The agreement to enact a 15 percent minimum corporate tax rate had been proposed by the United States, which has long looked for ways to minimize incentives for companies to shift profits abroad to lower their tax bills. As the Biden administration prepares to try and raise corporate tax rates in the United States, getting a global minimum tax in place has become critical to prevent companies from simply shifting their headquarters overseas.

The deal goes beyond setting a global minimum tax — it also creates new rules for the digital era. Under the agreement, technology giants like Amazon, Facebook and other big global businesses will be required to pay taxes in countries where their goods or services are sold, even if they have no physical presence there. The accord would represent a sea change in the way the world’s largest corporations have been taxed for decades, and is likely to see them pay more taxes while spreading taxable revenue more evenly to countries where those businesses earn sales. Until now, profits have largely been taxed where businesses have had a physical presence.

Read more: https://www.nytimes.com/2021/10/08/business/oecd-global-minimum-tax.html?smtyp=cur&smid=tw-nytimes

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I guess it's a start. IMHO it should be higher.

[Budi]

1. Thank You President Biden 💙

"The agreement is the culmination of years of fraught negotiations that were revived this year after President Biden took office and renewed the United States’ commitment to multilateralism.
Finance ministers have been racing to finalize the agreement, which they hope will reverse a decades-long race to the bottom of corporate tax rates that have encouraged companies to shift profits to low-tax jurisdictions, depriving nations of money they need to build new infrastructure and combat global health crises."

[Alexander Of Assyria]

2. The Pandora Papers opened up the fast lane after Biden's election opened up the highway.

After The Mob closed it all down to benefit the very same corporations and corporate media that want TFG to shut it down again.

Pandora and Biden thank you.

As said in Britain by Oxfam…Where are all our highways and hospitals? Where are all our daycares and paid sick leave and vacation leave and a decent minimum wage? Aside from the military, they are all over the world, but not here.

They are in The Antilles, The Bahamas, so many places it makes the head spin…offshore and off limits to We The People.

Corruption on a breathtaking scale, much astoundingly made legal, though by agent d the very same corrupt wealthy who hide their wealth, and their political influence, from the We.

[Wounded Bear]

3. I hope they can actually make something real happen...nt

[ProudMNDemocrat]

4. That would be great. 15% is too low. 25% is a more reasonable minimum.

Make these tax cheaters pay if they want to keep their profits out of the USA. The more countries they have profits socked away, the more expensive it will be for them. The US tax system will end up looking more like a bargain afterall at a higher rate than now.

[SCantiGOP]

5. I'll take 15%

In many cases that will be 15% higher than it is now.
Once that is in place and functioning, we can look at raising it to a more reasonable level, something I the range of 20-30%.

[PatrickforB]

6. This is great, and I will be calling both of my US Senators, who, as

Democrats, ought to be voting to ratify this treaty when it comes through.

[ancianita]

7. Moves ahead to end tax havens. Then I've got questions because it looks a bit weird.

If the corporations write the tax checks to the countries where their products are sold, don't those taxes just get passed on to those countries' consumers in the form of raised pricing?
These countries might all agree, but if some countries don't enforce payments, then what, they become tax havens? If they do enforce, what kind of enforcement would actually result in disallowing companies to write off penalties as 'the cost of doing business.'
(sidebar, I think: Amazon was in the red for over ten years from its startup; how did it stay in business all that time, and I wonder how prevalent surviving 'in the red' might be these days.)

That tax havens will go away sounds nice in theory, and might mollify publics, but undeclared profit still exists. Who enforces payments when corporations suddenly do less business. Do governments become corporations' accounting partners? What's the ultimate penalty for first and repeated non-payment of taxes?

Corporate tax laws are a whole other world, and I don't expect any answers, because this hasn't been done by government coordination before. And the more I think about corporations and this whole "agreement" news, the less I think it will work. It looks like some coordination exercise toward some other future 'projects.'

Companies/corporations usually work better when there's stability; if there's instability, they might become black market cartels. As climate disasters hit, alleged 'companies' will trend toward abandoning humans or driving them out of their extraction zones, or just disappearing.

I'm pretty negative about corporations and climate crises in the world's future.

[SergeStorms]

8. There will be one, tiny hold out country....

who will stay "neutral" just to have that enormous influx of cash come their way.

Yes, there will be penalties for such an action, but when you have nothing, you have nothing to lose.

Some country will willingly become a global pariah in order to benefit that way.

[RussBLib]

10. or two, or three, etc

If we are talking billions sloshing around, those billions will find a way.

[bucolic_frolic]

9. If you don't tax them they'll just borrow more or use buybacks or pay dividends

to shareholders which goes mostly to the rich. Capital feeds capitalism and in a broad sense that's why corporations come to dominate everything.

[BobTheSubgenius]

11. As the OP says "...it's a start."

I didn't know there were different ways of counting countries, and the idea of "jurisdictions" is very vague. But, it leaves a total substantially over 200, with 136 countries signed on to the initiative.

To me, having even a smattering of tax havens is just going to concentrate the money held within them. At worst, for the miscreant, it will make things a little inconvenient.