On the US proposal for global taxation of multinational corporations: ‘Minimum tax is disguised protectionism’ – Policy

U.S. Treasury Secretary Janet Yellen proposes a global minimum tax on corporate profits. He wants to do this with the OECD, which has been working for some time under a tax regime that will end 80 to 200 billion euros in taxes that companies around the world avoid.
…

U.S. Treasury Secretary Janet Yellen proposes a global minimum tax on corporate profits. He wants to do this through the OECD, which has been working for some time under a tax regime that will end 80 to 200 billion euros in taxes that companies around the world avoid. The first pillar of the OECD program is the provision of taxation for digital companies in the consumer country, and the second for minimum taxation for multinational companies. Former US President Donald Trump was on the brakes because the digital tax mainly affects US companies. Yellen is now back in power. He supports the global minimum tax rate of 21 percent. Isabel Verlindon, who leads PwC’s international exchange pricing team, is skeptical. He points out that Yellen’s proposal applies to President Joe Biden’s Made in America tax plan. “The name speaks for itself,” Verlinton says. “The proposal for a minimum tax is disguised protectionism. It has the explicit purpose of eliminating tax breaks for investments of US companies outside the United States. At the same time, the U.S. government wants to heavily subsidize investment in research and development. The project creates. That tax on global abnormally low tax revenues was intended to create a barrier against the tax cuts experienced by American companies in other countries. The basic reason for this is that, unlike the United States, it is not true that profits were transferred to countries that did not contribute to the inventions that supported those profits. With the introduction of the Guild tax, the corporate tax was reduced from 35 to 21 per cent and the tax on repatriation of those profits was reduced. Guild tax is 10.5 percent or half of the corporate tax. So, globally if a U.S. company does not pay 10.5 percent corporate tax, for example, if it holds its patent in a tax haven for an invention, U.S. tax authorities may levy additional taxes until that percentage is reached. “Yellen proposes at least 21 percent tax, which is too high,” says Luke de Pro, a professor of tax law at KU Louvain and an employee of Deloitte Law. “It has a clear purpose of bringing research and development back to the United States. The minimum tax is being sold as a measure to improve proper taxation and international relations, but in reality it is purely American selfish.” What does that tax mean for Belgian companies? Suppose a Belgian company pays interest, royalty or insurance premium to a sister company in Switzerland, which charges only 5 percent tax on that income. With a minimum tax rate of 21 percent, Belgian tax authorities are obliged to levy an additional tax of 16 percent. These rules only apply to multinationals with an annual income of over 50 750 million. This is the minimum revenue for multinational corporations whose EU is required to publish tax data to the government at their headquarters about the countries in which they operate. De Pro: “There are about thirty companies in Belgium. Flemish SMEs do not have to worry about getting in their way. Of course, if they work for such multinationals it can be determined that it will work for them in Belgium. They no longer have a place after the introduction of the new rules.” If tax breaks are on fire. “There are many tax benefits in our country, such as an effective tax of 3.75 percent on royalties on tax credit or patents for research and development,” says De Pro. “Many pharmaceutical companies feel very comfortable for that reason. I can only imagine that Pfizer or Johnson & Johnson would explore their Belgian subsidiary Risen d’Dire if that benefit leads to additional taxation in the United States. The Joe Biden’s government has just got it.” De Pro says that is questionable in perspective. The member state is forced to tax the tax benefit that a company receives in another EU member state. “So a company set up here should control Belgium Ireland if it pays less taxes. This is not only undesirable, it is illegal because it is against institutional freedom in the EU.” Michael Maws, a professor of taxation and a lawyer at Bloom, was very positive: “Tax evasion by such minimum tax international structures is not self-evident, especially as large companies can set up these structures because they have to pay a certain amount. By losing large corporations of that benefit, SMEs The financial objective is created to reduce the tax rate. “The financial implications are difficult to estimate, de Pro says:” Belgian tax authorities can now levy additional taxes on our companies that receive tax breaks abroad, and we will probably lose income because foreign investors will leave our country. Job loss and consequent economic damage to distribution companies. ”