How the new global minimum tax on multinationals will work (and how much will it collect)
Facts, estimates and comments on the first agreement for a proposed global minimum taxation of 15% for large multinationals
The G7 of finance and economy ministers reached an initial agreement for a proposal for a global minimum taxation of 15% for large multinationals. Unlike the Italian and French digital tax, which taxes revenues, this tax will affect companies with profit margins of at least 10%. These should devote 20% of their global profits to tax in the countries where they make sales.
WHAT THE GLOBAL TAX UNDERSTANDING PROVIDES
In fact, the anti-avoidance agreement for the moment commits the 7 Great, waiting to be discussed at the G20 headquarters under the Italian presidency as part of the July summit in Venice extended to the presence of other key players from the world, such as China and Russia. But from now on it represents a potentially crucial step forward: "a historic step towards greater fiscal equity", as defined by the Prime Minister Mario Draghi and far from being taken for granted within the G7 itself. "Three months ago", noted Paolo Gentiloni, present on behalf of Brussels as EU commissioner, who recognized the importance "of the change in the American administration" and the "personal role played by Janet Yellen" in achieving this goal "formidable".
THE TWO PILLARS OF THE UNDERSTANDING
Basically, as indicated by the final press release of the meeting and as explained later to journalists also by Minister Franco, it is an agreement based on "two pillars": the introduction of the principle of a minimum global tax rate of 15% for large companies, to be applied country by country in order to remove excesses of unfair competition; and that of a tightening on avoidance that should also and above all concern the big US tech companies (not specifically mentioned, but obviously included among the prominent multinationals) with the imposition of taxes on 20% of profits above the 10% threshold of profit to be “reallocated to the countries where sales are made”. Net of nominal domiciliation in any tax haven. A system that when fully operational should bring billions of euros more into the coffers of many states; forcing giants like Amazon, Facebook, Google or Microsoft to pay more overall; and make it possible to avoid cases such as that of the 'zero taxes' paid by the Irish branch of the group founded by Bill Gates thanks to the legal residence (without a single employee employed) established in Bermuda.
THE ESTIMATES OF THE EUROPEAN TAX OBSERVATORY
The European Tax Observatory – a body based in Paris and headed by the French economist Gabriel Zicman – has calculated: by setting the tax floor for multinationals at 15%, Europe would be able to collect 48 in the calculations of the Parisian body. 3 billion euros, while in the United States the bill would stand at 40.7. The richest slice of the European tax pie would go to Belgium (10.5 billion), which, however, bases its aggressive fiscal policy on ultralight taxes for multinationals, which has ended up at the center of Community accusations several times, and with the Netherlands, Ireland and others. Countries raises the main obstacles to the effective application of yesterday's agreement. The 2.7 billion Italian quota, just over half of the 4.3 billion of French relevance, is explained by some residual facilitated taxation encountered around the world from our (few) multinationals. "Some are public companies, such as Eni, which operates in 72 countries and according to the Observatory paid just over 4.73 billion in taxes in 2019 and should add a donation of 171.5 million on the altar of the minimun tax, or Enel, which should strengthen its 1.91 billion tax account with € 356.3 million, paid with the activities carried out in 15 countries. The other sector concerned is that of banks, but only on the upper floors, occupied by Intesa SanPaolo and Unicredi ”, wrote Il Sole 24 Ore .
THE COMMENT OF THE ECONOMIST OLDANI
“The European tax system is integrated, efficient and will apply the tax without difficulty, it will not be so easy for other countries, especially the G20. But Minister Daniele Franco has until July to find the right balance ", commented the economist Chiara Oldani on Startmag.it
THE ANALYSIS OF THE SUN 24 HOURS
"The most promising terrain, even if currently lacking in figures, is that of the reallocation, based on the geography of sales and not of the registered offices, for the taxes of digital multinationals – wrote Il Sole 24 Ore – There too the experience it teaches that the road from political agreements to operational rules is long. But also that the unilateral attempts carried out at the national level have a more symbolic than practical value. This is demonstrated by the 233 million of the first payment of the Italian Digital Tax: irrelevant in a public budget of 800 billion, and decidedly more modest even than the 780 million estimated by the Mef. An attempt that would be filed in the event of an operational take-off of yesterday's agreement ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-funzionera-e-quanto-fara-incassare-la-nuova-imposta-minima-globale-sulle-multinazionali/ on Sun, 06 Jun 2021 07:51:34 +0000.