US President Joe Biden has spoken on the administration’s pledge to donate 500 million doses of the Pfizer coronavirus (PFE.N) vaccine to the world’s poorest country. During a visit to St Ives in Cornwall, England on June 10, 2021.
Kevin Lemark | Reuters
WASHINGTON — President Joe Biden and leaders of the G-7 nations will endorse a minimum global corporate tax of at least 15% on Friday, one of a broader agreement to update international tax laws for the digital economy in the United States. globalization
Leaders Announce Plans to Replace Digital Services Taxes, Targeting America’s Largest Tech Companies With a new tax plan linked to where multinational companies actually do business. more than they set up their headquarters.
For Biden’s administration, the Global Minimum Tax Plan represents a concrete step towards its goal of creating what it calls a “minimum tax plan”. “Foreign Policy for the Middle Class”
This strategy aims to ensure that globalization and trade are regulated for the benefit of working Americans. Not just for billionaires and multinational corporations.
For the rest of the world, GMT is aimed at ending the tax break competition that has kept some countries lower corporate taxes than others. to attract multinational companies
If widely enforced, GMT will effectively cease the practice of global companies seeking low-tax jurisdictions such as Ireland and the British Virgin Islands to relocate its headquarters. and management will be elsewhere
The second major initiative Biden and G-7 leaders will announce on Friday is their plans. It is “actively considering” to expand the IMF’s Special Drawing Rights supply, the internal IMF currency available to low-income countries.
The plan aims to expand international development funding to poor countries. and help them buy the coronavirus vaccine and recover from the effects of the epidemic faster According to the White House fact sheet
The White House also said the G-7 leaders would agree to “continue to provide policy support to the global economy for as long as necessary to create a strong, balanced and inclusive economic recovery”.
But it is the GMT plan that has the greatest potential to affect a company’s bottom line and influence investor decisions.
The G-7 tariff deal “will serve as a starting point for reaching a broader deal at the G-20,” said a senior administration official who spoke to reporters behind the scenes to discuss ongoing talks. Ongoing
A joint statement released Thursday by Biden and Prime Minister Boris. England’s Johnson It presents an example of what to expect from a global tax agreement between the G-7 Partnerships.
British Prime Minister Boris Johnson Talks to US President Joe Biden during the meeting. Ahead of the G7 Summit at Carbis Bay, Cornwall, UK, 10 June 2021.
Toby Melville | Reuters
“We are committed to achieving an equitable solution to allocating the right to taxation. Market countries are entitled to a tax of at least 20% of profits in excess of the 10% margin for the largest and most profitable multinational enterprises,” the statement said.
“We also pledged to collect a minimum global tax of at least 15% in each country.”
As part of this Agreement “We will provide … the removal of all digital services tax. and other measures similar in every company.”
Digital Services Tax Repeal It’s a patchwork of country-by-country taxes that specifically target America’s largest tech companies. represents a real victory for the United States.
Analysts say the elimination of these taxes and ending the imminent threats of the new DST will add a level of certainty to the international tax system that will benefit big tech companies in the long run, even if the tariffs are raised. new global minimum near term expenses
Once the G-7 leaders accepted the GMT proposal, the next step would be to gain support from the G-20 nations, a diverse economic group that includes China, India, Brazil and Russia.
G-20 finance ministers and central bank governors are scheduled to meet in Venice, Italy, in July. IMF financing proposals and international tariff plans are expected to be high.
It is unclear at this time whether the GMT plan will win support from the 19 member states and the European Union.
Details of the plan have not been disclosed. And some G-20 countries maintain relatively low corporate tax rates in an effort to lure businesses in.
The Organization for Economic Co-operation and Development (OECD) has laid the foundation for most of the adoption of GMT, which published a blueprint last fall. In summary, a two-pillar approach to international taxation
The OECD Inclusive Framework on Base Erosion and Profit Shifting, also known as BEPS, is a product of negotiations with 137 Member States and jurisdictions.
One of the pillars is a plan for countries. To tax a multinational corporation based on its share of the profits that company receives from the consumers of a particular country.
The second pillar is the minimum global corporate tax. This is a required rate of at least 15%, which will apply even if the tax rate in a particular country is lower.