The G-7 begins a global battle over corporate taxation

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June 7, 2021, 6:32 a.m.

Here is today’s one Foreign police in short: the G-7 agree on a minimum overall corporate tax rate, Peruthe presidential election of is too close to be called, and NATO Secretary General Jens Stoltenberg visit Washington.

The G-7 commits to corporate tax

G-7 countries have reached a milestone corporate tax treaty over the weekend, giving impetus to ongoing Organization for Economic Co-operation and Development (OECD) talks on a new global minimum rate and rekindling the relevance of the G-7 ahead of a leaders’ summit in England later during the week.

The two pillars of the agreement aim to fight tax havens by first reducing incentives for companies to “move” abroad. The first pillar establishes a minimum global corporate tax rate of 15% while the second allows each country to levy taxes on the profits made by large multinationals in that country rather than where the company can. have its seat.

The deal has been sold as a way to help countries increase revenues as the COVID-19 pandemic strains resources. It is also designed to deal with a decades-long race to the bottom in corporate tax rates and a simultaneous increase in the number of companies making profits overseas. The average global corporate tax rate was around 40% in 1980 and now stands at around 23%, according to the figures. compiled by the Tax Foundation. As globalization has increased, the amount of profits made abroad has also increased: in the 1990s, around 5% of company profits were made by companies located outside the country where they were headquartered. social. This proportion jumped up at around 18% in the 2010s.

As Michael Hirsh wrote in Foreign police Last Friday, US President Joe Biden’s team viewed the new corporate tax plan as an indirect way to advance its stated campaign goals of ruling over corporations and leveling the playing field for the workplace. “Every country is made worse by tax competition, especially workers. … When people say they think the system is rigged, and when you consider why we have such extreme inequality, taxation is a big part of the story, ”a Biden administration official told Hirsch. .

Saluting the agreement As a “significant and unprecedented commitment” in a statement released on Saturday, US Treasury Secretary Janet Yellen said the deal also shows the Biden administration’s commitment to global cooperation. “I believe what you are seeing is a revival of multilateralism”, Yellen mentionned. Along with lofty rhetoric, the deal also helps the United States avoid rising taxes on digital services, which nearly half of European countries have proposed or implemented as a way to tax tech giants ( mainly American).

Well done from the technology. Maybe that’s one way of explaining the positive reviews from Silicon Valley. Facebook spokesperson Nick Clegg mentionned the company wants “the international tax reform process to be successful and to recognize that this could mean Facebook is paying more taxes.” José Castañeda, Google spokesperson, mentionned those of the research giant “strongly support the work underway to update international tax rules.”

On the first obstacle. It is far too early for a victory lap from the Biden administration, however. A meeting of G-20 finance ministers in July will test the plan’s appeal to a wider group of nations. There are also the OECD negotiations themselves: since the organization governs by consensus, an agreement could be hampered by objections from tax havens. Finally, there is the United States Congress, where at least one chamber may not even be in the hands of Democrats at the time the issue is put to a vote.

Set the bar. The minimum corporate rate is still too low for some. “Heis absurd for the G-7 to claim that it is revision a failing global tax system by implementing a global minimum corporate tax rate that is similar to the soft rates practiced by tax havens like Ireland, Switzerland and Singapore ”, mentionned Gabriela Bucher, Executive Director of Oxfam. “They set the bar so low that businesses can just step over it. “

The world this week

At Tuesday June 8, discussions resume at the World Trade Organizations advising on trade-related aspects of intellectual property rights regarding an intellectual property waiver on COVID-19 vaccines and other medical tools.

US Vice President Kamala Harris meets Mexican President Andrés Manuel López Obrador the day after talks with Guatemalan President Alejandro Giammattei.

At Wednesday June 9, the Albanian Parliament votes on whether to impeach Albanian President Ilir Meta for allegations that he failed in his constitutional duty of national unity by supporting an opposition party in the April elections.

Mongolia is holding presidential elections, with former Mongolian Prime Minister Ukhnaagiin Khurelsukh seen as the frontrunner.

At Thursday June 10, British Prime Minister Boris Johnson welcomes Biden for a meeting the day before the G-7 summit.

Talks in Vienna regarding a US return to the 2015 Iran nuclear deal and the lifting of US sanctions are resuming. This is the sixth round of discussions.

At Friday 11 June Johnson welcomes his counterparts from the United States, Canada, Italy, France, Germany and Japan for the first G-7 leaders’ summit since 2019. Leaders from Australia, India and Korea from the South were also invited.

At saturday 12 june Algeria is holding early parliamentary elections as part of Algerian President Abdelmadjid Tebboune’s efforts to quell protests over the pace of reforms.

What we are tracking today

AMLOthe majority are shrinking. López Obrador’s Morena party and its allies emerged from the legislative elections on Sunday with a reduced majority, dashing the president’s hopes of enacting constitutional changes, which require a two-thirds majority. Morena is still expected to hold between 265 and 292 seats in Mexico’s lower house, according to the national electoral body. The results of 15 state governors the races are not yet known, although pre-election polls favored Morena in most of these contests.

Perus election. Peru’s ideologically polarized presidential election between socialist Pedro Castillo and conservative Keiko Fujimori is too close to call, according to unofficial results. A quick tally from Ipsos showed Castillo ahead of Fujimori by 0.4% while a previous poll out of the polls showed Fujimori 0.6% ahead. With only 42% of the votes counted, Fujimori leads Castillo by 52.9% to 47.1% in the official count.

NATO in Washington. NATO Secretary General Jens Stoltenberg is in Washington today for talks with Biden, US Secretary of Defense Lloyd Austin and US National Security Advisor Jake Sullivan. The meetings come as the organization prepares for its first Biden Presidency summit on June 14 in Brussels. Biden and Stoltenberg to discuss burden sharing, cyber attacks, climate change and ‘challenges’ for Russia and China, said Jen Psaki, White House press secretary mentionned Friday.

The lifeline of the CDU. The Christian Democratic Union (CDU) marked a decisive victory in the elections in the eastern state of Saxony-Anhalt on Sunday, bolstering Armin Laschet’s hopes of inheriting the chancellery from CDU member Angela Merkel in the national elections in September. According to a survey exit, the CDU improved its 2016 victory by six points, beating competition from the far-right Alternative party for Germany, which placed second. Despite a recent increase in national polls, the Green Party came in seventh, pointing to future difficulties for the party in the former East Germany.

The unrest in Colombia. Colombian President Iván Duque Marquez to ask lawmakers to approve new measures to respond to accusations of police brutality during weeks of protests that turned into an anti-government protest movement. The president calls for increased police surveillance and better training after human rights groups reported dozens of police killings in recent weeks. Negotiations between the government and protest leaders have stalled due to disagreements between the two sides over the preconditions for the talks.

The German military has more than troops to consider in its plans to withdraw from Afghanistan: 65,000 cans of beer (about 60 beers per soldier), as well as 340 bottles of wine, remain in German military stores at its base in Mazar, Afghanistan, north of Kabul. The drink glut likely formed when Ansgar Meyer, the commander in charge, banned alcohol consumption during the final days of the withdrawal (which is now expected to be completed in July). Since Afghans are prohibited from consuming alcohol, leaving cans behind is not an option. The German military authorities must now decide whether to ship the drinks home with their troops or dispose of them on the spot.

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