Finance ministers representing the G7 countries have started negotiations around a global minimum corporate tax rate. This is a move that may unsettle some big companies, as it would seem the main aim would be to prevent large corporations from "dodging" tax by operating out of countries with preferable, or no, set corporate tax rate.
The "compromise" reached on Saturday 5th, is a global minimum of 15%, which has been agreed in principle by the US, Canada, Japan, Germany, France, Italy and the UK. This is now likely to be debated further at the next meeting of the G20, in Venice, in July.
Importantly, this figure is higher than some countries were originally hoping for, with the UK pushing hard to ensure big tech companies weren't getting an easy ride tax-wise, and the US not being so keen on such strict measures. As a result of this compromise, the US does now want the countries with Digital Service Taxes above this 15% rate (France, Italy and the UK) to reduce these percentages with immediate effect - a move which these coutries are not keen to do straight away, or at least until a truly global agreement is reached. Could this pave the way for further dispute over this figure at the G20 summit?
If further disagreement does occur at this summit, there are certain countries that we can expect to weigh in on the side of leniency, The G20 comprises of 19 countries, plus the EU, and there are countries such as Ireland, Cyprus and Liechtenstein, who have current rates below the 15% (all around the 12.5%) and benefit therefore from being a tax "haven" of sorts for large corporations - a status I'm sure they aren't keen to lose.
It wlll be interesting to see how these discussions develop at the G20, whether these countries push back at all, and whether pressure from big tech companies changes, or strengthens, the stance of the US towards a lower percentage. Either way, a global minimum will be seen by many as step in the right direction, as lots of big companies have made the news over recent years for legally dodging tax and have been perceived to not pay "their share" back into countires they make enormous profits in.
written by Duncan Balcon for the KC Partner's Legal Brief - Full publication available at https://www.linkedin.com/company/kcpartners-ltd/posts/?feedView=all