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> But London and Switzerland are already working to ensure they don't get badly hit by the minimum tax rate, as they fear it will make their financial districts

> But London and Switzerland are already working to ensure they don't get badly hit by the minimum tax rate, as they fear it will make their financial districts less attractive Well they're missing the point of this imposition, because it was designed expressly to avoid companies choosing 'favorable' locations to manage their tax affairs. Suck it up London and Switzerland.

legitster 5y ago
Why should they? What incentive do they have to join an agreement against their wishes? Surely it's not the politicians jobs to lose jobs and income to other countries for nothing in return.
- philistine 5y ago
  The G7 includes the UK and Switzerland-by-proxy of the EU, since Switzerland is in the European Market. They're not signing anything against their wishes. They're trying to water down the deal. The question at play here is whether or not they'll get away with it, and I sure hope they don't. Giving exemptions to the rule will create massive incentives to game those exemptions.
  - Rochus 5y ago
    Again, a lot of disinformation is spread to create envy. The current average profit tax rate in Switzerland is 15.1%. Here is a recent article on this: https://www.organisator.ch/steuerreport-2020-vergleichsweise-tiefe-unternehmenssteuern-in-der-schweiz/ https://www.organisator.ch/steuerreport-2020-vergleichsweise... There are a lot of places with lower or even zero taxes (even some within the USA).
    - tjoff 5y ago
      How is average relevant? And why would they go out of their way to avoid something they already do?
      - Rochus 5y ago
        Why should it not be relevant? You also know the minimum and maximum rate. A lot of big international companies are in Zurich where the rate is ~21% and among the highest in Switzerland. There are obviously criteria other than taxes, such as personnel trained at one of the world's top technical universities (ETH Zurich).
- Gene5ive 5y ago
  It's reasonable to expect 17 million relatively well off people to make some concessions when hundreds of millions of others have asked them to through the diplomacy of their elected officials. They should do it because elected officials will sign it into law. It will be signed into law because people asked for it. People asked for it because they benefit from it. People benefit from it because they need stuff the government pays for. There is no reason to sympathize with governments that depend on clever paperwork for their nation's success because that is not a tangible good. There is every reason to sympathize with governments that are trying to raise money to invest in their citizens because that is a tangible good. Eliminating tax havens is no more objectionable than closing an account with a bank that has lost your trust. The bank will adapt and learn as it always does.
  - legitster 5y ago
    > It will be signed into law because people asked for it. Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me? I'm not saying it's not a good thing, but representatives should be looking after their own people's interests and cooperation agreements need to be conditioned on that.
    - fnord123 5y ago
      The people's interest is benefited by doing 'the right thing'. And if enough countries sign up to do 'the right thing' then they can release 'FATCA 2: Electric Bugaloo'
    - creato 5y ago
      > Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me? Because if this agreement has any teeth, it will require some kind of sanctions against the defectors from the rest of the members of the deal.
    - collaborative 5y ago
      It took a couple world wars to learn that only looking after your own interests leads to confrontation Using your country's priviledged position to your advantage creates grievances and division Just picture a world full of embargos as retaliation for tax dodging. Many countries could decide it's not worth keeping an open border (with flow of goods) with a country that tries to attract companies (that sell in your country) with low taxes. A trade agreemeny (EEC etc) rests on the good will of its signatories. But offering your country as a tax haven breaks this relationship. The only reason it has taken this long to get this type of agreement going is that the underpriviledged countries lacked democratic pressure. No healthy democracy would allow the flow of untaxed goods from third countries The democratic will is slowly building up, and if it is denied it will lead to confrontation and overall waste of resources. It is in everyone's interest to agree to a global minimum tax rate (but it requires vision)
- mdasen 5y ago
  I think there are two answers to this. First, I think the "incentive" would be "not getting kicked out of trading blocks and having punitive tariffs". Large countries can impose their will on smaller ones to an extent. In the extreme, larger and more powerful countries can invade smaller ones. The G7 countries won't be invading Switzerland, but they do have a lot of levers to make it very difficult for Swiss companies to do business. I don't think anything that rises to the level of a blockade is likely, but larger and more powerful countries have levers to use against smaller ones. Again, I think the most likely result would be things like tariffs and restrictions on businesses, but there are so many options available to large, powerful countries to just make things annoying. Heck, we've seen some of this with Brexit. British people are annoyed that they have to pay for a visa to enter the Schengen Area. That's a relatively small annoyance. Countries can ban foreigners from certain other countries. Countries control their airspace and Switzerland is land and air-locked by the EU. Again, I don't think things will be extreme like that, but it's not hard to imagine all sorts of ways one can be incentivized to join an agreement at the point of a gun. Second, I think the point is that it doesn't require those countries to join the agreement. Let's say that a company makes $10B in profit and it's accounted for as $1B in the US and $9B in a tax haven. They pay 25% on the $1B which is 2.5% of their global profits. The US then says, "under the law, you now owe an additional $1.25B since you didn't hit the 15% minimum." The whole problem around tax havens is that companies are accounting for their profits in tax havens while their operations are actually in other countries. The company is actually doing their business and running their operations in the US, France, Japan, etc., but claiming that a company in a tax haven is the one actually making the profits. That also means that it's relatively easy to target them. If you're a tech company whose employees are in the US and EU and whose sales are in the US and EU, but you're funneling the profits through a tax haven, it's still pretty easy for the US and EU to force you to give them money. Company: "No, we didn't make any money in your jurisdiction! Better luck next year!" US/EU: "Watch while we raid your offices, prevent your employees from working, shut down your data centers, prevent our financial institutions from being allowed to do business with you (which means you can't pay workers and can't collect money from advertisers/users/etc.), etc." Company: "Well, when you put it that way..." I mean, it'd still end up in court, but it's not as if the tax haven needs to join the agreement for the G7 countries to enforce a minimum tax on multinational companies. If the companies are actually doing business in G7 countries, their money/assets/etc. is in those countries to be confiscated. "Hey, you're pretending that you're earning that money in a tax haven and not here, but I'm willing to bet that cutting you off here will have a huge impact on those profits..." Right now, companies are saying, "we didn't earn that money in your country so you can't do anything" and this agreement is kinda about, "it doesn't matter; if you haven't paid 15% of your global profits in tax, we're going to take that money from you even if you claim it was earned somewhere else."
hogFeast 5y ago
This isn't about countries with 15% corporate tax rates. This is about countries, like Ireland or Netherlands, with 0% corporate tax rates. The UK loses a huge amount of corporate tax from EU tax havens, and the opposition has formed because the purpose of this deal is to allow the US to raise their corporate tax rate...rather than stop corporate tax avoidance (the US doesn't suffer hugely from this, all the profit in places like the UK that goes to Ireland ends up back in the US, and gets taxed).
- aidanf 5y ago
  > This is about countries, like Ireland or Netherlands, with 0% corporate tax rates. Ireland's corporate tax rate is 12.5%. It is one of the lowest in Europe but certainly not 0%.
  - pjc50 5y ago
    https://en.wikipedia.org/wiki/Ireland_v_Commission https://en.wikipedia.org/wiki/Ireland_v_Commission : it doesn't matter what the headline rate is, it matters what the effective rate is. > "selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014." Tricks include transfer pricing; company A charges company B an arbitrary number to reduce company B's profit to zero (so it pays no tax) but this gets classed as exempt in company A.
  - hogFeast 5y ago
    That is the rate for Irish corporations, not foreign ones. Ireland, Netherlands, Luxembourg all negotiated bilateral deals with individual corporations so their effective tax rates are, at most, 3%.
- rad_gruchalski 5y ago
  The 2019 Dutch corporate tax rate is 19% of the taxable income up to and including €200,000, above which the rate is 25%. The lower rate will decrease to 16.5% in 2020. In 2021 the rate for the first bracket will again decrease to 15% with taxable income up to €245,000. Where do you get that 0% from.
Rochus 5y ago
"Swiss cantons set their own additional rates on top of the federal portion of corporate tax. As a general rule, companies in Switzerland pay a total corporate tax rate of somewhere between 11.9% and 21.6%." (from https://www.expatica.com/ch/finance/taxes/corporate-tax-in-switzerland-452226/ https://www.expatica.com/ch/finance/taxes/corporate-tax-in-s...) And there are also communal taxes, so three levels of tax collectors, see https://www.ch.ch/en/tax-rates-switzerland/ https://www.ch.ch/en/tax-rates-switzerland/
fnord123 5y ago
https://www.youtube.com/watch?v=bZuTdpxHcW8 https://www.youtube.com/watch?v=bZuTdpxHcW8 But Black Dynamite, I sell drugs in the community!

legitster 5y ago

Why should they? What incentive do they have to join an agreement against their wishes? Surely it's not the politicians jobs to lose jobs and income to other countries for nothing in return.

philistine 5y ago
The G7 includes the UK and Switzerland-by-proxy of the EU, since Switzerland is in the European Market. They're not signing anything against their wishes. They're trying to water down the deal. The question at play here is whether or not they'll get away with it, and I sure hope they don't. Giving exemptions to the rule will create massive incentives to game those exemptions.
- Rochus 5y ago
  Again, a lot of disinformation is spread to create envy. The current average profit tax rate in Switzerland is 15.1%. Here is a recent article on this: https://www.organisator.ch/steuerreport-2020-vergleichsweise-tiefe-unternehmenssteuern-in-der-schweiz/ https://www.organisator.ch/steuerreport-2020-vergleichsweise... There are a lot of places with lower or even zero taxes (even some within the USA).
  - tjoff 5y ago
    How is average relevant? And why would they go out of their way to avoid something they already do?
    - Rochus 5y ago
      Why should it not be relevant? You also know the minimum and maximum rate. A lot of big international companies are in Zurich where the rate is ~21% and among the highest in Switzerland. There are obviously criteria other than taxes, such as personnel trained at one of the world's top technical universities (ETH Zurich).
Gene5ive 5y ago
It's reasonable to expect 17 million relatively well off people to make some concessions when hundreds of millions of others have asked them to through the diplomacy of their elected officials. They should do it because elected officials will sign it into law. It will be signed into law because people asked for it. People asked for it because they benefit from it. People benefit from it because they need stuff the government pays for. There is no reason to sympathize with governments that depend on clever paperwork for their nation's success because that is not a tangible good. There is every reason to sympathize with governments that are trying to raise money to invest in their citizens because that is a tangible good. Eliminating tax havens is no more objectionable than closing an account with a bank that has lost your trust. The bank will adapt and learn as it always does.
- legitster 5y ago
  > It will be signed into law because people asked for it. Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me? I'm not saying it's not a good thing, but representatives should be looking after their own people's interests and cooperation agreements need to be conditioned on that.
  - fnord123 5y ago
    The people's interest is benefited by doing 'the right thing'. And if enough countries sign up to do 'the right thing' then they can release 'FATCA 2: Electric Bugaloo'
  - creato 5y ago
    > Again, did Swiss citizens ask for it? It seemed like US politicians asked for it. Why should I raise my prices because you said you are losing customers to me? Because if this agreement has any teeth, it will require some kind of sanctions against the defectors from the rest of the members of the deal.
  - collaborative 5y ago
    It took a couple world wars to learn that only looking after your own interests leads to confrontation Using your country's priviledged position to your advantage creates grievances and division Just picture a world full of embargos as retaliation for tax dodging. Many countries could decide it's not worth keeping an open border (with flow of goods) with a country that tries to attract companies (that sell in your country) with low taxes. A trade agreemeny (EEC etc) rests on the good will of its signatories. But offering your country as a tax haven breaks this relationship. The only reason it has taken this long to get this type of agreement going is that the underpriviledged countries lacked democratic pressure. No healthy democracy would allow the flow of untaxed goods from third countries The democratic will is slowly building up, and if it is denied it will lead to confrontation and overall waste of resources. It is in everyone's interest to agree to a global minimum tax rate (but it requires vision)
mdasen 5y ago
I think there are two answers to this. First, I think the "incentive" would be "not getting kicked out of trading blocks and having punitive tariffs". Large countries can impose their will on smaller ones to an extent. In the extreme, larger and more powerful countries can invade smaller ones. The G7 countries won't be invading Switzerland, but they do have a lot of levers to make it very difficult for Swiss companies to do business. I don't think anything that rises to the level of a blockade is likely, but larger and more powerful countries have levers to use against smaller ones. Again, I think the most likely result would be things like tariffs and restrictions on businesses, but there are so many options available to large, powerful countries to just make things annoying. Heck, we've seen some of this with Brexit. British people are annoyed that they have to pay for a visa to enter the Schengen Area. That's a relatively small annoyance. Countries can ban foreigners from certain other countries. Countries control their airspace and Switzerland is land and air-locked by the EU. Again, I don't think things will be extreme like that, but it's not hard to imagine all sorts of ways one can be incentivized to join an agreement at the point of a gun. Second, I think the point is that it doesn't require those countries to join the agreement. Let's say that a company makes $10B in profit and it's accounted for as $1B in the US and $9B in a tax haven. They pay 25% on the $1B which is 2.5% of their global profits. The US then says, "under the law, you now owe an additional $1.25B since you didn't hit the 15% minimum." The whole problem around tax havens is that companies are accounting for their profits in tax havens while their operations are actually in other countries. The company is actually doing their business and running their operations in the US, France, Japan, etc., but claiming that a company in a tax haven is the one actually making the profits. That also means that it's relatively easy to target them. If you're a tech company whose employees are in the US and EU and whose sales are in the US and EU, but you're funneling the profits through a tax haven, it's still pretty easy for the US and EU to force you to give them money. Company: "No, we didn't make any money in your jurisdiction! Better luck next year!" US/EU: "Watch while we raid your offices, prevent your employees from working, shut down your data centers, prevent our financial institutions from being allowed to do business with you (which means you can't pay workers and can't collect money from advertisers/users/etc.), etc." Company: "Well, when you put it that way..." I mean, it'd still end up in court, but it's not as if the tax haven needs to join the agreement for the G7 countries to enforce a minimum tax on multinational companies. If the companies are actually doing business in G7 countries, their money/assets/etc. is in those countries to be confiscated. "Hey, you're pretending that you're earning that money in a tax haven and not here, but I'm willing to bet that cutting you off here will have a huge impact on those profits..." Right now, companies are saying, "we didn't earn that money in your country so you can't do anything" and this agreement is kinda about, "it doesn't matter; if you haven't paid 15% of your global profits in tax, we're going to take that money from you even if you claim it was earned somewhere else."

hogFeast 5y ago

This isn't about countries with 15% corporate tax rates. This is about countries, like Ireland or Netherlands, with 0% corporate tax rates. The UK loses a huge amount of corporate tax from EU tax havens, and the opposition has formed because the purpose of this deal is to allow the US to raise their corporate tax rate...rather than stop corporate tax avoidance (the US doesn't suffer hugely from this, all the profit in places like the UK that goes to Ireland ends up back in the US, and gets taxed).

aidanf 5y ago
> This is about countries, like Ireland or Netherlands, with 0% corporate tax rates. Ireland's corporate tax rate is 12.5%. It is one of the lowest in Europe but certainly not 0%.
- pjc50 5y ago
  https://en.wikipedia.org/wiki/Ireland_v_Commission https://en.wikipedia.org/wiki/Ireland_v_Commission : it doesn't matter what the headline rate is, it matters what the effective rate is. > "selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014." Tricks include transfer pricing; company A charges company B an arbitrary number to reduce company B's profit to zero (so it pays no tax) but this gets classed as exempt in company A.
- hogFeast 5y ago
  That is the rate for Irish corporations, not foreign ones. Ireland, Netherlands, Luxembourg all negotiated bilateral deals with individual corporations so their effective tax rates are, at most, 3%.
rad_gruchalski 5y ago
The 2019 Dutch corporate tax rate is 19% of the taxable income up to and including €200,000, above which the rate is 25%. The lower rate will decrease to 16.5% in 2020. In 2021 the rate for the first bracket will again decrease to 15% with taxable income up to €245,000. Where do you get that 0% from.

Rochus 5y ago

"Swiss cantons set their own additional rates on top of the federal portion of corporate tax. As a general rule, companies in Switzerland pay a total corporate tax rate of somewhere between 11.9% and 21.6%." (from https://www.expatica.com/ch/finance/taxes/corporate-tax-in-switzerland-452226/ https://www.expatica.com/ch/finance/taxes/corporate-tax-in-s...) And there are also communal taxes, so three levels of tax collectors, see https://www.ch.ch/en/tax-rates-switzerland/ https://www.ch.ch/en/tax-rates-switzerland/

fnord123 5y ago

https://www.youtube.com/watch?v=bZuTdpxHcW8 https://www.youtube.com/watch?v=bZuTdpxHcW8 But Black Dynamite, I sell drugs in the community!