136 Countries Agree To Minimum Corporate Tax Rate (cnn.com) 76
A group of 136 countries have agreed to a global treaty that would tax large multinationals at a minimum rate of 15% and require companies to pay taxes in the countries where they do business. CNN reports: Estonia, Hungary and -- most notably -- Ireland joined the agreement Thursday. It is now supported by all nations in the Organization for Economic Cooperation and Development and the G20. The countries that signed on to the international treaty represent more than 90% of global GDP. Four countries that participated in the talks -- Kenya, Nigeria, Pakistan and Sri Lanka -- have not yet joined the agreement. The Biden administration breathed new life into the global initiative earlier this year and secured the support of the G7 countries in June, paving the way for a preliminary deal in July. Ireland, which had declined to join the initial agreement in July, has a corporate tax rate of 12.5% -- a major factor in persuading companies such as Facebook, Apple and Google to locate their European headquarters in the country. Ireland signed up after the preliminary agreement was revised to remove a stipulation that rates should be set at a minimum of "at least 15%."
The new rate would apply to 1,556 multinationals based in Ireland, employing about 400,000 people. More than 160,000 businesses making less than $867 million in annual revenue and employing about 1.8 million people would still be taxed at 12.5%. Alongside a minimum corporate tax rate, the pact includes provisions to ensure that multinational companies pay tax where they generate sales and profits, and not just where they have a physical presence. That could have major ramifications for tech companies such as Google and Amazon, which have amassed vast profits in countries where they pay relatively little tax. The OECD expects implementation of the agreement to begin in 2023. But even with Ireland and other previous holdouts now on board, the deal still requires countries to pass domestic legislation.
The new rate would apply to 1,556 multinationals based in Ireland, employing about 400,000 people. More than 160,000 businesses making less than $867 million in annual revenue and employing about 1.8 million people would still be taxed at 12.5%. Alongside a minimum corporate tax rate, the pact includes provisions to ensure that multinational companies pay tax where they generate sales and profits, and not just where they have a physical presence. That could have major ramifications for tech companies such as Google and Amazon, which have amassed vast profits in countries where they pay relatively little tax. The OECD expects implementation of the agreement to begin in 2023. But even with Ireland and other previous holdouts now on board, the deal still requires countries to pass domestic legislation.
It won't matter. (Score:4, Interesting)
There's already plenty hiding in the US. [icij.org]
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If the GQP get a lackey elected as POTUS in 2024, on day 1, they'll withdraw from this agreement as well as the Paris accord.
Any other general field levelling agreements will also be history. After all, with MAGA and the GQP there can only be one No 1 and that is what is left of the USA after it splits into two or three separate states.
That's what the likes of Tuckums, Bannon and the rest want to happen and they'll do anything they can to make it so.
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Amazon pays all their EU taxes in Luxembourg. (17% already)
Last year was their best ever and they managed to declare a deficit of 1.8 billion and got a tax credit instead of paying taxes.
This won't work ever!
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And Bezos pays $0.00 in taxes. That is at the heart of the problem.
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Corporations should be taxed on revenue, not profits. I get taxed on gross income, not income after I pay for housing, food, utilities, clothes, education, booze, durable goods, etc. They should collect a 15% revenue tax at time of sale or when a service is rendered just as they do for VAT or sales tax.
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I was thinking the tax could be a lot lower if revenue was taxed, as obviously there is more of it. If you tax profits enough to actually matter, then that cost will get passed on to the customer as well anyway. Taxing revenue also prevents accounting games where the company shows no official profit and yet somehow the owners and shareholders are mysteriously getting rich.
Kenya, Nigeria, Pakistan and Sri Lanka (Score:5, Funny)
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And we just gotten out of one of them.
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No, Nigeria.
The prince has stopped sending me emails, so I presume he "got out".
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Wrong 'stan.
The corporate tax rate in Afghanistan is 20%.
Afghanistan corporate tax rate [tradingeconomics.com]
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are there any corporations left there?
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Mostly mining.
And demining.
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"Kenya, Nigeria, Pakistan and Sri Lanka -- have not yet joined the agreement"
Guess we know where Apple is moving next.
It's almost as if you missed the "require companies to pay taxes in the countries where they do business" part.
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Sri Lanka?
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Sri Lanka? Sounds serendipitous.
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Sure, but maintaining a presence in Ireland has a cost associated with it. If they're still saving money, they'll stick around. If not, they'll leave
Corporations should locate for business reasons, not for taxes. If they are in Ireland only for the low taxes, that leads to lower overall prosperity.
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Sure, but maintaining a presence in Ireland has a cost associated with it. If they're still saving money, they'll stick around. If not, they'll leave
Corporations should locate for business reasons, not for taxes. If they are in Ireland only for the low taxes, that leads to lower overall prosperity.
You don't think LEGALLY lowering your tax liability is a business reason?
At least refine your statement o "Corporations should locate for business reasons that I approve of"
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Sure, but maintaining a presence in Ireland has a cost associated with it. If they're still saving money, they'll stick around. If not, they'll leave
Corporations should locate for business reasons, not for taxes. If they are in Ireland only for the low taxes, that leads to lower overall prosperity.
Of course it is. And if a business can get people to work for free - that's also a legitimate business reasons. Anything other than murder in the pursuit of profit is 100 percent legitimate. And make no mistake - murder for increased profit is okay if they get away with it. Audi throttle design, GM ignition switches, Goodyear tires, the Ford Pinto hard connection of the gas time to the body. Controller failing full throttle, High speed blowouts, Ignition switch cuts off, loss of control, then airbgs to not deploy in the resulting crash, and immolation after mere fender bender accidents. People died, but Profit!
The there is the Boeing 737 Max.
While those are the ones caught - if not, doggone it, the shareholders would have been served, and served well, If not for those stupid do gooders who got in the way. Completely immoral, but legitimate.
Tax evasion is such a minor thing.
But to address that, if enough people decide they've had the shits of buying things made by companies who enjopy reaping the largess of a country, yet not wanting to contribute to that country. You might find what is leagal and what is not changing a mite.
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Sure, but maintaining a presence in Ireland has a cost associated with it. If they're still saving money, they'll stick around. If not, they'll leave
Corporations should locate for business reasons, not for taxes. If they are in Ireland only for the low taxes, that leads to lower overall prosperity.
Er, isn't the tax and regulatory environment ... a business reason?
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>>Corporations should locate for business reasons, not for taxes.
While what you say seems correct, the observation of history prove correct in the USA.
We can see in the USA, all the abandoned mining towns, and abandoned railroad locations once resources were used up.
Is 'tax savings' a resource? It seems to be a tradable product. Therefore it will have to create other good and services to replace it's resources if companies want to stay.
>>If they are in Ireland only for the low taxes, that leads
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Historically, many US companies chose Ireland over Britain for their EU presence because for tax reasons.
But today, many US companies still want their EU headquarters in an English-speaking country, with a legal system beinbg somewhat similar to the US one. Britain is no longer an option. Malta never was a practical option. That leaves only Ireland.
So from today's perspective, Ireland no longer needs to have lower tax rates than Britain to get EU headquarters of US companies.
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Re: Cool, but ... (Score:1)
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keeping the additional tax revenue is not a problem, neither are incentives as long as they are not applied in a way to reduce tax burden. This puts other countries on a level playing field rather than a race to the bottom.
How did you come to that conclusion? Doesn't Ireland retain one of the lowest tax rates in the EU? Won't other countries have to race DOWN to 15% if they want to compete?
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Doesn't Ireland retain one of the lowest tax rates in the EU? Won't other countries have to race DOWN to 15% if they want to compete?
It's not just about the 15%, there's a much more important clause to "require companies to pay taxes in the countries where they do business".
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How did you come to that conclusion? Doesn't Ireland retain one of the lowest tax rates in the EU? Won't other countries have to race DOWN to 15% if they want to compete?
Not really. Ireland has a pretty simple tax code; you pay 12.5% of profits made in Ireland. France has a higher corporate tax rate, but many companies in France pay less than they would in Ireland because of various allowed tax write-offs, loopholes, etc.
Avoiding that "Race to the Bottom" (Score:2, Insightful)
Re:Avoiding that "Race to the Bottom" (Score:4, Insightful)
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Re:Avoiding that "Race to the Bottom" (Score:5, Insightful)
Sounds like somebody thinks a world in which the basis on which governments compete is by how much they cede to private enterprise is a good idea (as opposed to the dozens of other ways they can compete which is actually good for us, like healthy and educated workers, functional infrastructure and services, etc etc).
Are humans here for economies or are economies here for humans? Sometimes I think people lose track of when the tail is wagging the dog.
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True.
But in a corporatist system, you need to attract money to make money (previously known as investment), until someone comes up with a better game to play.
My cynical take is that this is just maintaining the hegemony of western countries, who have more infrastructure and services to offer, thereby cutting off developing economies from attracting favor by a nominal tax cut, leaving open more heinous means of attracting favor.
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I don't really understand people complaining about this destroying tax competition; no major economy had tax as low as that anyway. The only places that did were a handful of tiny little backwaters like Ireland and the Cayman Islands and who used it to act as parasites on the global economy - any major economy, i.e. the actual engines of the world economy - can still lower tax 5% than they ever have done before.
But given that's not the trajectory anyway it's even less meaningful. The UK dropped it's to 19%
Re: Avoiding that "Race to the Bottom" (Score:2)
Wrong question. The answer to the right question is that âyes, countries are for economies and without an economy there is literally no reason for a country to existâ. Both, in turn, exist for the people they concern.
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Are humans here for economies or are economies here for humans?
That question sorts the liberals from the rest of the political spectrum. When you ask whether an economy is successful, you can just look at the growth of money, but that does not generally correlate with improvements in the well-being of citizens. In fact growth in money-making may require hardship of some citizens, which would be a Bad Thing.
Re: Avoiding that "Race to the Bottom" (Score:2)
It's hilarious that what you term "ceding" I would instead call "government taking less of that which someone else made, by the compulsion of force".
For example, I would not say the German government "ceded" concentration camp victims their freedom in 1945.
Your use of that word clearly shows that you believe government is presumably entitled to everything people produce, and it is only through their largesse and restraint that we are allowed to keep something for our own needs.
How generous!
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I would instead call "government taking less of that which someone else made, by the compulsion of force".
Well, yes, that's something somebody would say if they were, in fact, stupid.
Re:Avoiding that "Race to the Bottom" (Score:5, Insightful)
Countries can compete on things that are not "who is closest to 0% tax". As an added bonus, they having enough funds mean those governments can afford to pay for competence.
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Also, your math is flawed: the last several times the U.S. government has raised corporate taxes, government income has gone down, because there's been less economic activity to tax
Supply-side economists are absolutely sure certain things happen, when there's actually zero evidence they happen.
Like this.
And the last several times they've lowered corporate taxes, the resulting economic boom has caused an increase in government income from taxation
And this.
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Yes, I am absolutely certain that observable things in the past have happened.
Great. Show your observations.
I eagerly await examples like Reagan's tax cuts that did jack shit until Volker let up on interest rates. Or if you're younger, how Trump's cuts supposedly created a boom yet there's no corresponding inflection point in GDP growth. Oh, and revenue from both sets of cuts didn't jump like you are claiming.
Or if you're even older, you might point to the first champion of supply-side success, JFK's cuts that supposedly did the same...yet revenue didn't increase until more than a
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new life (Score:2)
Treaty? (Score:2)
Moronic virtue signaling (Score:2)
It is not possible to tax a corporation (Score:1)
A corporation has a fiduciary duty to its shareholders -- no one else
If a government taxes corporate revenue or profit, the money will need to come from its customers. Unless of course they reduce staff, or executive salaries
Rather than tax the corporation itself, the tax needs to apply to the individuals receiving the disbursements from that profit -- namely those shareholders and executives.
Supporting Corporate tax evasion (Score:3)
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Sigh. Idiots. Ever wonder why GST or Sales tax is actually higher than most peoples income tax.
For people on much more than median income, even in the USA, total income tax is typically going to be higher, I suspect, although it will vary depending on circumstances. For those on low earnings, sales tax is higher because there is a level of income disregard before income tax kicks in. For me, in the UK, even with 20% sales tax on most but not all things, I expect I pay more in income taxes than sales taxes. Certainly the marginal rates are much higher.
Not really what tax is for (Score:1)
Tax is levied to allow the government to perform its duties on behalf of the people. The amount and type of tax that is levied should be based on a calculation of how much income is required, balanced against the impact of taxation on various taxable sectors.
This agreement seems to involve setting an arbitrary tax rate merely for the sake of setting a tax rate. If the tax isn't required by a state signatory, it's expected to collect it anyway.
I am entirely on board with the idea tha
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Its not strange at all. Without a minimum tax rate corporations just move all of their profits to whatever country has the lowest tax rate, usually Ireland. The result is that the the vast majority of countries collect no corporate tax at all on any corporation large enough to do the accounting work of moving its profits overseas. Ireland is basically stealing everyone else's tax revenue. So getting them to agree to raise their very low tax rate is a huge win for everyone else.
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Without a minimum tax rate corporations just move all of their profits to whatever country has the lowest tax rate
To fix that with a minimum corporate tax rate would require agreement from numerous nations that currently benefit from running financial institutions for parking funds with minimal taxation or oversight. Why would these countries change their policies? I don't think the current situation is satisfactory, but the fact is that one nation (e.g. the USA) cannot impose their laws on another nation (e.g. The British Virgin Islands).
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If a state wants to discourage companies moving out of the country and importing everything (physically or virtually), traditional protectionism exists (where taxes are levied on foreign companies in order to subsidize local ones). Alternatives exist too, such as forcing trade to be conducted via local subsidia
actually, 136 countries did NOT agree... (Score:2)
a handful of elites from 136 countries have made a non-binding agreement with each other. The PEOPLE of these countries made no such deal. The governments of these countries made no such deal.
Wake me up when somebody passes a TREATY along these lines...