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Global minimum corporate tax: 130 nations to support U.S. proposal

260 points by DocFeind 5y ago

midjji 5y ago
It would also require a global consensus on tax incentives. Which... well if you thought the global minimum corporate tax was unlikely...
LatteLazy 5y ago
Does anyone know at what point the tax is paid? I ask because publicly traded companies avoid it by doing share buy backs. So Apple technically makes no profit. 1% or 15% or 100% of technically nothing is nothing... >The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. Quid Pro quo Clarice!
- mwint 5y ago
  Apple might make no profit, but wouldn't the shareholders selling their stock back to Apple have to report the sale as capital gains? So (at least some) taxes would be paid on that money, just not by Apple directly.
  - LatteLazy 5y ago
    So, if they paid a dividend apple would pay Corp tax AND the share holder would pay cap gains. A buy back avoids the Corp tax and let's the shareholder delay paying (until they sell) and also pay a lower rate if they're careful (long term holdings I think get a lower rate, 10% I think?). There is another reply here saying Corp tax is still due. I didn't think it was but I'll check after dinner.
    - ClumsyPilot 5y ago
      If my shares are handled by an LTD I'll never pay tax because i will keep reinvesting that monet.
      - LatteLazy 5y ago
        You'd pay once you took the money out right?
- goodcanadian 5y ago
  Share buybacks are not a business expense. They are paid out of after tax income; they are not tax deductible.
- jacobr1 5y ago
  The classic offshore approach is that Apple USA doesn't make any profit because they find a way to make the accounting work such that Apple Ireland actually made the profit. It only becomes income or dividends when it gets transferred back to the USA. An example might be to assign the patent ownership for the new M1 chips to the Ireland subsidiary. Sell them for $1. Then charge the USA based firm $1 billion in licensing costs. Make $1 billion in income selling the chips. Boom $0 profit. Except now there is massive profit in the Ireland subsidiary, which can pay very low taxes. The problem is that the money is stuck there. If they give it back the parent company as a dividend, then that is income to the parent.
  - dantheman 5y ago
    Then it's spent in ireland and it's why ireland has a tech industry.
RPaaS 5y ago
https://trumpwon.biz/ https://trumpwon.biz/
cryptoz 5y ago
Corporations should be taxed on revenue, not profit.
- bpodgursky 5y ago
  Of all the arguments to be made about corporate taxation, this one makes the absolute least sense.
  - advisedwang 5y ago
    Taxing revenue does shut off many tax loopholes. Accounting can play lots of games with profit/loss, but revenue is much harder to obfuscate. However this basically just seems like a Sales Tax to me, which we already have in most countries.
    - evanrich 5y ago
      And would kill a lot of low margin businesses right?
      - bpodgursky 5y ago
        Right, it is crazy to treat the revenue of 2% margin grocery stores the same as 50% margin SaaS products. I don't know what kind of economy these people are trying to build.
    - jacobr1 5y ago
      Which is why this thinking morphs from sales-tax to VAT, so it captures the revenue across the supply-chain.
  - njarboe 5y ago
    I would say that most of the problems with wealthy people not paying their "fair" share (what ever that might be) is the fact that people are taxed on income and corporations are taxed on profit. Many wealthy people do what they want to do with companies (taxed only on profits) or non-profits (not taxed at all!), while the average Joe is taxed on their income. It would be a good idea to have both people and companies taxed the same way. Personally I think it would be good to get rid of income and corporate taxes all together and replace it with a land value tax. So much more freedom, less regulation, and crazy tax loopholes.
maverick-iceman 5y ago
This could be the catalyst for privacy oriented coins such as Monero and Zcash. Also the right catalyst for doing away with exchanges and start buying and selling crypto on OTC type market with 1:1 deals and interactions Like it happens for grey area commodities such as marijuana and prostitution
- miohtama 5y ago
  If yo are a legit company you need to file your accounts with the government. Maybe some small funds and companies can be on a paper in Seychelles (no accounts needed) and have their Monero induced cocaine parties, but this law aims at Amazon (effectice tax rate 0%), Apple, Google, Microsoft, Netflix and sucy.
  - maverick-iceman 5y ago
    > If yo are a legit company you need to file your accounts with the government. You don't have , you do because you are afraid of repercussions. With a totally private coin and transaction happening off the chain....well it's not like they have any means to see what you are doing and present repercussions.
shrubble 5y ago
Watch what the City of London (the financial center) does, would be my suggestion.
- miohtama 5y ago
  They try to delay this by murking the waters with gross revenue based tax for digital services https://www.bloomberg.com/news/articles/2021-05-16/u-k-s-sunak-isn-t-sold-on-biden-s-global-business-tax-plan https://www.bloomberg.com/news/articles/2021-05-16/u-k-s-sun...
ginko 5y ago
Anyone got a list of the countries? I tried googling around a bit to try to find it. At least other articles[1] mention all G20 countries are on board. That would include India, Russia and most importantly China. [1] https://www.bbc.com/news/business-57573380 https://www.bbc.com/news/business-57573380
- mikeha 5y ago
  https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-members-joining-statement-on-two-pillar-solution-to-address-tax-challenges-arising-from-digitalisation-july-2021.pdf https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
  - balsamiq 5y ago
    Notably absent from the list: Ireland.
    - Mortiffer 5y ago
      Low corpate tax countries not on the list: Ireland 12.5%, Kuwait 0%, Hungary 9%, Kosovo 10%, kyrgystan 10%, Lichtenstein 12.5%, Moldova12%, Sark 0%(UK related but only had 1 active bank so perhaps they did not need it on the list ) I am surprised that they managed to get most of the typical island states on the list to convert. And it will be super interesting if Kuwait and Sark can stay strong or if new companies will take the opportunity to address this market. https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rat...
      - csomar 5y ago
        Kuwait is not really popular to headquarter your company (the UAE is), and they have lots of oil. I think it'll be hard to convince them otherwise.
- deleted 5y ago
  [deleted]
sand_castles 5y ago
So you are saying that the South Korean government will stop providing special subsidies to their Chaebol ? Low tax can be in the form of premium land grant, or govt provided healthcare for workers.
jessaustin 5y ago
Two-thirds of humanity, which makes sense because one wouldn't expect much overlap with the third of humanity who suffer USA economic sanctions. Different methods for accomplishing the same goals... https://sanctionskill.org/wp-content/uploads/2020/03/39SanctionedCountries3.pdf https://sanctionskill.org/wp-content/uploads/2020/03/39Sanct...
CryptoPunk 5y ago
This alone: >>The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. >>In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered. Was enough to address this concern: >>If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere. Not only can the concerns that are being used to justify a global minimum tax be addressed through other means, the tax agreement itself is a terrible policy, because it freezes the evolution of tax policy for the whole world, presupposing that an income tax, and specifically a corporate income tax, is ideal. There are structural problems with the corporate income tax, and many economists argue for eliminating it altogether, and replacing it with other types of taxes (e.g. a transaction tax, a carbon tax, a land tax, etc). But this locks it in place as a constant for all countries. It's exactly this kind of homogenization of governance that Europe had to get past to prosper: https://aeon.co/amp/essays/how-the-fall-of-the-roman-empire-paved-the-road-to-modernity https://aeon.co/amp/essays/how-the-fall-of-the-roman-empire-...
- jessaustin 5y ago
  As if "locking it in" weren't bad enough, the billionaires also propose to lock in the USA system that they have already completely reconstructed to their own benefit.
- onlyrealcuzzo 5y ago
  Corporate tax has only been evolving recently to the benefit of the largest companies primarily benefit the richest individuals in the world. It's fine if you want it to continue evolving, but I don't.
  - CryptoPunk 5y ago
    This is also a form of evolution, just one that prevents the corporate income tax from being eliminated in favor of something more efficient and fair.
jbaudanza 5y ago
Imposing taxes on a legal entity always seemed fishy to me. Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes? Is it the rich executives? Why not just raise taxes on the rich directly? I suspect in most cases the tax burden is just shifted onto the lower-income workers or the customers somehow.
- eunos 5y ago
  > who exactly are we targeting with these taxes? Is it the rich executives? Lot of times the money were not handed to the employee, executives included. They just stay at the company or paid to the financial company that owned the companies.
  - harikb 5y ago
    At least from my eyes, recent trends are exact opposite. Stock buyback returns the money to investors (by raising stock price). Huge bonuses to executives. The company itself is managed on a very thin buffer so that a) When things go south, they can always ask the government for bail-out. Too big to fail & all that. b) Anything affecting the company, in terms of regulations, can be shown to directly affect the employees and their job. This may be a cynical take, but this is what I see.
    - ClumsyPilot 5y ago
      But investors keep their money in honding companies and trusts, sometimes registered in panama. The billions never actually have a physical person as their official owner
- bradford 5y ago
  > it sounds great to say, "Make the corporations pay their share!" the Global minimum tax rate is only tangentially related to the 'make corporations pay their share' problem. The real problem is a 'race to the bottom' where corporations will shop around and put tax headquarters in the country with the smallest tax rate (i.e., Ireland). > I suspect in most cases the tax burden is just shifted The big question for me is: is it really a significant tax burden? or do the companies choose nations with the lowest tax rate because they are seeking a competitive advantage, and thereby inducing all their competitors to make a similiar choice? the minimum tax rate is trying to level the playing field in this regard.
bitL 5y ago
How are developing countries going to catch up with developed ones if they agree on the same tax policies?
- sbacic 5y ago
  They won't and I'd argue that that is part of the plan.
- onlyrealcuzzo 5y ago
  China didn't need to have ridiculously attractive taxes to catch up. Corporate taxes in China were ~33% when it was growing the fastest. Just having a low-cost labor force and scale and global politics not being anti-offshoring was enough. As China becomes more expensive, I'm not sure why Indonesia, Nigeria, Pakistan, Egypt, and/or Vietnam couldn't do something similar. India seems to be in that process. Unfortunately, if you're a small, poor country like Western Sahara - I don't think tax policies are enough to move the needle.
  - doomroot 5y ago
    China should be the exception in all cases. The don’t exactly act in a democratic or open way.
- nicoburns 5y ago
  Protectionism.
natvert 5y ago
When the benefits of creating a new country outweigh the costs (to shareholders), does it fall within the fiduciary duty of corporate leaders to form a new country?
- fotta 5y ago
  I'm curious if the world-at-large would recognize a corporate country though. A country is only a country if other countries recognize it as such.
  - josefx 5y ago
    I wouldn't be surprised if you only needed one country to do it and then could funnel all your taxes through that complicit country. If that happened we would be back at the double Irish with an extra step. Forcing all participants to recognize the same countries could have all kinds of good or bad side effects especially when you consider China and Taiwan.
- newsclues 5y ago
  Why would a corporation want a country? If you don’t control the planet you’re just waiting for your competitors to crush you.
  - rio_de_mierda 5y ago
    Corporate motives can usually be reduced to one of three things: cheap (ideally free/forced) labor, cheap resources, and limits on liability.
    - newsclues 5y ago
      Monopolize markets.
- ClumsyPilot 5y ago
  Hahaha, and then be saddled with paying for defence infrastructure and education?"
ppeetteerr 5y ago
The complexity of this agreement and its execution are incredible. Not only getting alignment from 130 members, but a system by which companies report their revenue _and the cost of the revenue_ for every country! Future tax avoidance schemes will most likely try to "divert" their costs towards high-revenue countries like the US. After all, what is the profit margin of an iPhone sold in Romania? For some context, corporate tax makes up around 7% of the US's federal revenue. While this legislation is important, it's a fraction of the overall revenue pie.
- colechristensen 5y ago
  How much revenue is "missing" due to tax magic?
  - rebelos 5y ago
    A lot. Changes in policy cut the effective corporate tax rate down from ~40% around 1950 to where it is today. Lyn Alden covered this in an excellent post: https://www.lynalden.com/tax-shift/ https://www.lynalden.com/tax-shift/.
- nabla9 5y ago
  You are mistaken. It's not that complicated and does not work that way. 1) No foreign country is required to collect minimum tax. 2) If some country is not collecting minimum tax, home country tops up the tax until minimum tax requirement is fulfilled. 3) It's up to the company to show evidence that it paid minimum tax in other countries so that it's not double taxed in country where it's hq is. 4) They need to report taxes in other countries only to their home countries.
  - ppeetteerr 5y ago
    Thanks for clarifying
motohagiography 5y ago
The idea that politicians and bureaucracies can defer to external international conventions to be the bad-cop for wildly unpopular policy decisions - and then claim to be powerless to stop them - is anathema to democratic principles like national representation, consent of the governed, and other concepts of human rights. This proposal seems like a global group of government affiliated people colluding to fleece each others' citizens instead of serving them. This is literally what conspiracy theorists have been predicting for decades, it's a terrible shame to make them right.
- colechristensen 5y ago
  I don't think the New World Order conspiracy theorists were particularly paranoid about closing corporate tax haven loopholes.
  - motohagiography 5y ago
    I thought their whole schtick was "one world government," which is precisely what colluding to destroy tax competition is, as is banning capital flight which results from abusive policy.
    - axlee 5y ago
      colluding: to act together secretly or illegally in order to deceive or cheat someone. And please: capital flight being the results of abusive policy? Corporations and wealthy individuals will always try to avoid giving the fair share to the society that enabled their wealth in the first place: the case where wealth moves because of abusive policies is so marginal in the ocean of pure greed. Some countries are fiscal parasites and benefit from the theft of other societies, and this is how we deal with parasites. Should we just watch wealth evaporate away to offshore stashes, wealth that actually belongs to the people?
      - dane-pgp 5y ago
        > wealthy individuals will always try to avoid giving the fair share to the society Given that the median US household pays about $10k in taxes per year, and has a net worth of about $120k, perhaps we also need a global minimum wealth tax of say 8% per year, with a tax free allowance on the first $100m of net worth.
mustafa_pasi 5y ago
This is a new kind of imperialism. The G7 makes up the rules, under the guise of fighting tax evasion or financing of terrorist activities. Then they make all the less powerful countries comply to those rules. If they do not, they get greylisted or blacklisted by some "international" watchdog, making it much harder for those countries to participate in the global economy. Of course only the poorer less influential countries will suffer under such arbitrary rules dictated by the G7. Nobody is going to greylist the US or Germany. It is effectively a new mechanism for the G7 to encroach on the sovereignty of other countries. And if you tell me, taxing international corporations is a good thing, I agree, but it is just a pretense. Just a setup. The G7 can also just tell those international corporations to fess up the money. They have enough influence to do just that. There is no reason to include Poland, Sri Lanka or Botwana or Bolivia in this agreement. The reason those countries are included is so that later on, the same agreement can be used to blackmail those countries.
- throwkeep 5y ago
  You'll own nothing, and you'll be happy. https://www.youtube.com/watch?v=lBBxWtKKQiA https://www.youtube.com/watch?v=lBBxWtKKQiA
  - ceejayoz 5y ago
    Sounds scary out of context, but it's hardly a silly prediction. Uber, AirBnB, clothing rental, device upgrade plans...
    - asteroidbelt 5y ago
      It is not bad as long as you own stocks, which you can exchange into material goods. Like some of my friends can afford a decent house, but prefer renting because it gives greater flexibility (they can rent a small flat in the center of the city in a walking distance to the office and meet with friends often while they don't have children instead of investing into big house in the suburbs with empty rooms they wouldn't use). But if you own nothing and don't save, this is bad. The UK did a great thing last year, they increased to minimum payment to private pension (equivalent of US 401k) to 8% of salary, so even irresponsible people will have some savings at retirement age. And I think the UK should continue gradually increasing these contributions.
okareaman 5y ago
Instead of trying to change the behavior of other countries, why not implement an alternative minimum tax for companies that do business in the United States?
- asteroidbelt 5y ago
  Taxes would be too hard to compute. What if a company sells a few car in the US, the car is manufactured in Germany with parts from France, and development is split between 40 countries in the world including US, how much the company should pay in the US?
krupan 5y ago
“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Translation, "We want to have these corporations in our country so badly that we keep paying more and more for them in order to compete with the other countries that also want them. We now want to collude with these other countries to keep our costs lower." Sounds an awful lot like price or salary fixing. Who is actually going to pay for this in the end?
- repsilat 5y ago
  Isn't it a consensus position among economists that corporate taxation is inefficient and badly targeted? That taxes on individuals (wages, goods&services, capital gains) and on land are easier to collect and better at providing desired incentives? Really, isn't a "race to the bottom" a virtuous cycle here? Kinda weird to see Yellen -- Treasury Secretary and former Fed Chair -- making this kind of statement.
  - bronzeage 5y ago
    When the majority of wealth is held by billionaire corporate owners, and the only tax they pay is corporate tax, not even selling their shares, what other option do you have to tax them?
  - nonameiguess 5y ago
    Actually a common reason given for having corporate taxes is they're easier to collect since you collect from fewer payers. The biggest problem is they obscure tax burden. All tax burden is ultimately born by individuals. If you levy on the corporation instead of the individual directly, then the burden just gets divided between clients, suppliers, owners, and employees, and how it get divides ends up depending upon the relative price elasticity of demand for each of their services. When taxes are levied on individuals directly, how the burden gets distributed can instead be codified in law. At least in that sense, corporate taxes are somewhat anti-democratic. Politicians and voters are out for blood on this, but what they really want is for the owners to pay more tax. That can be better accomplished by just taxing capital gains and carried interest. There is, of course, also tremendous deadweight loss in that business decisions are often dictated by what results in the best tax treatment rather than what is economically optimal. The fact that it actually makes financial sense to entirely relocate operations to other countries is itself a pretty big indictment of taxes like this. That's a huge amount of resources being allocated in a way that does not result in any improvement to the goods and services. But, to the point of this treaty, if they're not going to eliminate corporate taxes and tax owners directly instead, the next best thing is at least make the taxes the same everywhere so the relative change in rates will stop dictating business decisions.
beprogrammed 5y ago
International solutions, for international problems of international corporations.
blhack 5y ago
The US will immediately leave this compact as soon as a fiscal libertarian takes office.
- bgorman 5y ago
  What fiscal libertarian has a reasonable chance at becoming president? I’m not aware of any
calkuta 5y ago
Don't governments have enough money? I think they could do with a lot less actually.
- asteroidbelt 5y ago
  That's what conservatives always say (but not always do): decrease taxes, make the governments smaller, give money back to people, so people will spend money more efficiently than the government.
DevX101 5y ago
Did a quick cross ref for the non-signatories ranked by GDP: https://pastebin.com/YyYTV65i https://pastebin.com/YyYTV65i I'd predict corporations to move to countries on this list that are non-sanctioned, high rule of law index, and easy to do business in. Ireland and Estonia in particular come to mind.
- r00fus 5y ago
  Ireland is a big hole. Many corps have huge nexus there simply to avoid corporate tax. Would the Dutch-Irish double-sandwich still work - maybe with another country?
  - NoboruWataya 5y ago
    It doesn't even work right now - the rules that enabled that structure have already been phased out.
- patrickaljord 5y ago
  Do you have a link to the list of signatories?
- purple_ferret 5y ago
  signing on to this should be a requirement to stay in the EU
- novok 5y ago
  I'm surprised %0 taxes on everything UAE is implicitly a signatory! The list of countries: https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-members-joining-statement-on-two-pillar-solution-to-address-tax-challenges-arising-from-digitalisation-july-2021.pdf https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
  - lordnacho 5y ago
    That made me wonder, what's to stop a country from having a high rate but also offering a tax credit? Or some sort of disguised give-back? If you Google the Malta Corp tax rate, you find 35%. You need to dig a big more to read that actually you can get 30% refunded. Haven't tried it myself.
petermcneeley 5y ago
In the limit of free flowing capital and goods this minimum is likely to also be the maximum. This will lead to a more homogenous and uniform financial situation across all countries. A much better idea would be tarrifs. A country can tax each corporation as they see fit and what is in line with their values. They can also then have corporate or other taxes in line with their values. This would lead to a diverse menagerie of various governments and various kinds of financing. I would argue this is healthier than every country becoming the USA.
- handrous 5y ago
  Why would this put downward pressure on the maximum corporate tax? The current minimum is 0%. Why isn't 0% also the de facto maximum, right now? Why would raising the minimum force it to (tend to) equal the maximum?
  - petermcneeley 5y ago
    ~0% is what many pay right now because various mechanisms are used to pay the tax of the lowest country tax rate. So if you enforce a minimum then likely they will pay ~min%. This is a game theory problem not an economic or political one.
    - handrous 5y ago
      Ah, so you'd propose that 0% is the current de facto minimum and maximum, and that raising the minimum is bad per se? I took your original post to mean that states would not, practically speaking, have the liberty to impose even higher rates if a de jure minimum were imposed, while currently they do, but... rather you seem to disagree with the direct point of the move itself, which is to prevent under-cutting some minimum above 0%? Or am I misunderstanding you?
      - petermcneeley 5y ago
        If the point is for every country to have the same tax rate then yes this solves that problem. Each country cannot impose a higher rate de jure for the same reason why now the effective rate is 0%.
hartator 5y ago
I rather we all agree to stop printing money.
- asteroidbelt 5y ago
  The comment is correct: printing the money is actually taxing the poorest: because government spends money inefficiently, and printed money end up in the richest (and worse than that, corrupt and counterproductive) people pockets. Like if you tax a next Bezos, you will have no next Amazon. But if you stop printing money, you will take money from some government contractor, who is a friend of a senator.
- timbit42 5y ago
  But then the house of cards would collapse.
maverick-iceman 5y ago
Will this include rebate schemes? Also Africa and countries with low enforcement (either willing low enforcement or caused by scarce public sector resources) will have capital flowing in. Once the law is there the next race to the bottom will happen on odds of enforcement of such law. Russia, Ukraine, Georgia, Uruguay, Belize, Panama, UAE, Liberia , the Caribbean. The usual suspects will continue to dominate the transfer pricing business, only they'd house foundations and 501c3 type vehicles, as well as private companies which are normally not in the authority watchlist. Such as the Trump Organization before he decided to run for President
- notsureaboutpg 5y ago
  What corporation wants to do all the paperwork to spend all the money to establish all the shells to reside in a country where they technically legally owe the same tax but the government is just lax in collecting it? The government can change its mind any time and start enforcing and you will owe tax and have no way out of it. Moving again won't erase history if they claim back taxes.
throwaway34241 5y ago
Apparently it's also possible to address the issue of shifting corporate profits to tax-havens even without a large scale international agreement. Basically, corporations have one place money comes in and two places it comes out, like so: sales = expenses + profits If you tax the sales, then deduct the expenses, that leaves the incidence of the tax on the profits. But importantly, unlike profits, it's usually clear to which country a sale belongs to. Where this gets complicated is international borders, the solution there is to only deduct domestic expenses. At first this seems protectionist, but according to economists changes to the currency exchange rates eventually balance out the effect and it ends up trade neutral. This idea was actually seriously proposed as part of US tax reform a few years ago (and I saw some praise from both left/right leaning economists), but it got killed because some big companies were against it. It's called a border adjustment tax. [1] Even though the above is an interesting idea this recent attempt to come to an international agreement is probably also reasonable, since it should accomplish some of the same things and getting countries to agree to a headline number is probably more realistically achievable than in-depth reform (so it's likely solutions like this or nothing at least in the medium term). [1] https://en.wikipedia.org/wiki/Border-adjustment_tax https://en.wikipedia.org/wiki/Border-adjustment_tax
- tastyfreeze 5y ago
  An agreed upon international base tax rate is the wrong solution. This becomes a minimum wage for nations and removes the incentive to compete to be the home of corporate headquarters. Border adjustment tax removes the tax shelter loophole and strengthens the incentive to be a good place to headquarter a corporation.
  - collaborative 5y ago
    Nations can still compete. Stability, rule of law, infrastructure investment, etc. Everything except letting companies use the country as a pirate's cave
    - gruez 5y ago
      >Nations can still compete. Stability, rule of law, infrastructure investment, etc. don't forget tax incentives. Sure, every country has to charge 15% tax, but if you domicile your country here we'll give you tax credits!
orlovs 5y ago
I did not read full list of comments, but before celebrating victory of “they gonna pay”. Let me guess, many countries will change tax code that corporate tax being paid only on witholding.
slim 5y ago
OECD original blogpost : https://oecdecoscope.blog/2020/10/20/tax-challenges-from-digitalisation-a-global-two-pillar-solution-could-increase-tax-revenues-and-support-economic-activity/ https://oecdecoscope.blog/2020/10/20/tax-challenges-from-dig... Actually Pillar 2, which makes corporations pay taxes where they actually make money, is more interesting. Because if you sell my data to say swiss corporations, why would you pay taxes in switzerland and not in my country? In other words why not pay taxes where you extract resources ?
dantheman 5y ago
Such a terrible idea.
jcrites 5y ago
Honest question: what is the reason for there to be a corporate tax at all? When corporations distribute profit to their owners/shareholders, those people must pay income tax on it. Why not have the government get its share from income tax? Corporate tax seems like double taxation, and its existence seemingly means that all companies have a lower margin than they would otherwise, meaning that they need to charge higher prices to be equally profitable. For companies that sell products to consumers, one would presume this would result in higher prices for everyday items. In other words, isn't a corporate tax ultimately regressive because it causes companies that sell products to consumers to have higher prices? Companies that sell everyday items like food and essentials will pass on that corporate tax through higher prices to consumers. Meanwhile, any business owners/shareholders who receive substantial income pay income tax in the highest tax bracket for any income received from the company. Corporate taxes just seem to hurt margins, resulting in a regressive effect on the economy through higher prices, and discourage companies from conducting research and development, by again hurting their margins. Why not eliminate corporate tax and rely on income tax, or better yet a model like sales tax/VAT? There will be exceptions like business owners who start a business from nothing, see the net value of their shares rise into a billion dollar valuation, yet pay little in taxes -- however they haven't necessarily sold those shares to receive income yet, and when they do they'll be taxed at the capital gains rate. You could argue that the capital gains tax (or qualified dividend tax) should be higher, which is an entirely separate matter from the corporate tax, but if you raise that rate then you discourage prospective business owners from starting businesses, and you discourage investors from investing and holding shares in companies for the long term. The top 1% of people by income already pay 40% of all taxes. Meanwhile, the top 2-5% pay the next 20% of all taxes; so the top 5% of earners collectively pay 60% of income tax. Given this fact it surprises me that people say that the rich need to pay their "fair share". https://www.heritage.org/taxes/commentary/1-chart-how-much-the-rich-pay-taxes https://www.heritage.org/taxes/commentary/1-chart-how-much-t... (Note that this is considering income, not wealth. We don't tax wealth, and I don't personally think we should while people live, beyond generally taxing real estate to pay for the services provided near that real estate, such as roads, police, schools, etc. I have mixed feelings about the estate tax i.e. taxes paid on inheritances at death).
- dane-pgp 5y ago
patrickaljord 5y ago
Next year the US will spend $715 billion on military budget alone, a $10 billion increase from last year. Shouldn't the government try to cut spending before thinking of how it could increase tax revenue? It's like an obese person wanting to lose weight while eating more each year and thinking of increasing time spent at the gym to make up for it, shouldn't they try eating less if they want to lose weight?
- standardUser 5y ago
  This is not about increasing tax revenue it is about preventing multinationals from evading taxes. It's similar in concept to the Alternative Minimum Tax, which was designed to prevent an ever-increasing web of exemptions and loopholes from allowing some people to pay little-to-no taxes.
  - dantheman 5y ago
    Taxes aren't a virtue - they're a necessary evil. They're coercion, only paid on the threat of violence. We should be aiming to minimize taxes and fund programs through other voluntary means. So where the money is being spent should be considered when talking about how much should be raised, since it the cause.
    - 8note 5y ago
      Voluntary mechanisms only fill the needs of the wealthy, who also operate largely on coercive means(all that private property only exists by force of the government). At least taxes are by consensus, both in the amount, and what they find.
- samsonradu 5y ago
  No. Losing weight might read as being weaker. Why would any gov want that?
- akvadrako 5y ago
  The military budget is a red herring. If the budget was reduced to zero it would barely effect the deficit, yet over the long term it would probably cost more, since a weak nation invites war.
WalterBright 5y ago
There's no way one can get 130 nations to agree on anything without a stick.
LAC-Tech 5y ago
Classic anti-competitive behaviour.
neil_s 5y ago
Surprised to see the negative comments, despite HN comments' usual bent. As someone that moved around multiple countries, I was impressed by the US' tax by citizenship on global income. About time we apply the same to corporations as we do to individuals, given how much easier it is for corporations to move their income around.
aussieguy1234 5y ago
I've always considered the current system to be unfair. Most tax revenue comes from employees, while the super wealthy hire the best of the best accountants. They pay these accountants big commissions and bonuses, then they pay next to nothing in tax.
patrick451 5y ago
This is really just price fixing, which is generally considered anti-competitive and typically illegal. Governments should be subject to the same competitive pressures they impose on everyone else.
Proven 5y ago
Congratulations to Ireland and those other nations that did not support this nonsense!
limaoscarjuliet 5y ago
130 != 195 - new tax havens will crop up quickly in the remaining 65 countries. Even if unstable and not trustworthy today, trust will arrive there with money and people who deal in the tax haven services. Apologies for being cynical, but this agreement is just slight change of music in the 0% corporate tax dance.
AnonymousMonk 5y ago
I'd like everyone yo know that in the United States, such a scheme is clratly a delegstion of authority. illegal and unconstitutional, and a clear case of Treason ny all the elected and appointed people who support this garbage idea

260 points by DocFeind 5y ago

It would also require a global consensus on tax incentives. Which... well if you thought the global minimum corporate tax was unlikely...

LatteLazy 5y ago

Does anyone know at what point the tax is paid? I ask because publicly traded companies avoid it by doing share buy backs. So Apple technically makes no profit. 1% or 15% or 100% of technically nothing is nothing... >The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. Quid Pro quo Clarice!

mwint 5y ago
Apple might make no profit, but wouldn't the shareholders selling their stock back to Apple have to report the sale as capital gains? So (at least some) taxes would be paid on that money, just not by Apple directly.
- LatteLazy 5y ago
  So, if they paid a dividend apple would pay Corp tax AND the share holder would pay cap gains. A buy back avoids the Corp tax and let's the shareholder delay paying (until they sell) and also pay a lower rate if they're careful (long term holdings I think get a lower rate, 10% I think?). There is another reply here saying Corp tax is still due. I didn't think it was but I'll check after dinner.
  - ClumsyPilot 5y ago
    If my shares are handled by an LTD I'll never pay tax because i will keep reinvesting that monet.
    - LatteLazy 5y ago
      You'd pay once you took the money out right?
goodcanadian 5y ago
Share buybacks are not a business expense. They are paid out of after tax income; they are not tax deductible.
jacobr1 5y ago
The classic offshore approach is that Apple USA doesn't make any profit because they find a way to make the accounting work such that Apple Ireland actually made the profit. It only becomes income or dividends when it gets transferred back to the USA. An example might be to assign the patent ownership for the new M1 chips to the Ireland subsidiary. Sell them for $1. Then charge the USA based firm $1 billion in licensing costs. Make $1 billion in income selling the chips. Boom $0 profit. Except now there is massive profit in the Ireland subsidiary, which can pay very low taxes. The problem is that the money is stuck there. If they give it back the parent company as a dividend, then that is income to the parent.
- dantheman 5y ago
  Then it's spent in ireland and it's why ireland has a tech industry.

RPaaS 5y ago

https://trumpwon.biz/ https://trumpwon.biz/

cryptoz 5y ago

Corporations should be taxed on revenue, not profit.

bpodgursky 5y ago
Of all the arguments to be made about corporate taxation, this one makes the absolute least sense.
- advisedwang 5y ago
  Taxing revenue does shut off many tax loopholes. Accounting can play lots of games with profit/loss, but revenue is much harder to obfuscate. However this basically just seems like a Sales Tax to me, which we already have in most countries.
  - evanrich 5y ago
    And would kill a lot of low margin businesses right?
    - bpodgursky 5y ago
      Right, it is crazy to treat the revenue of 2% margin grocery stores the same as 50% margin SaaS products. I don't know what kind of economy these people are trying to build.
  - jacobr1 5y ago
    Which is why this thinking morphs from sales-tax to VAT, so it captures the revenue across the supply-chain.
- njarboe 5y ago
  I would say that most of the problems with wealthy people not paying their "fair" share (what ever that might be) is the fact that people are taxed on income and corporations are taxed on profit. Many wealthy people do what they want to do with companies (taxed only on profits) or non-profits (not taxed at all!), while the average Joe is taxed on their income. It would be a good idea to have both people and companies taxed the same way. Personally I think it would be good to get rid of income and corporate taxes all together and replace it with a land value tax. So much more freedom, less regulation, and crazy tax loopholes.

maverick-iceman 5y ago

This could be the catalyst for privacy oriented coins such as Monero and Zcash. Also the right catalyst for doing away with exchanges and start buying and selling crypto on OTC type market with 1:1 deals and interactions Like it happens for grey area commodities such as marijuana and prostitution

miohtama 5y ago
If yo are a legit company you need to file your accounts with the government. Maybe some small funds and companies can be on a paper in Seychelles (no accounts needed) and have their Monero induced cocaine parties, but this law aims at Amazon (effectice tax rate 0%), Apple, Google, Microsoft, Netflix and sucy.
- maverick-iceman 5y ago
  > If yo are a legit company you need to file your accounts with the government. You don't have , you do because you are afraid of repercussions. With a totally private coin and transaction happening off the chain....well it's not like they have any means to see what you are doing and present repercussions.

shrubble 5y ago

Watch what the City of London (the financial center) does, would be my suggestion.

miohtama 5y ago
They try to delay this by murking the waters with gross revenue based tax for digital services https://www.bloomberg.com/news/articles/2021-05-16/u-k-s-sunak-isn-t-sold-on-biden-s-global-business-tax-plan https://www.bloomberg.com/news/articles/2021-05-16/u-k-s-sun...

ginko 5y ago

Anyone got a list of the countries? I tried googling around a bit to try to find it. At least other articles[1] mention all G20 countries are on board. That would include India, Russia and most importantly China. [1] https://www.bbc.com/news/business-57573380 https://www.bbc.com/news/business-57573380

mikeha 5y ago
https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-members-joining-statement-on-two-pillar-solution-to-address-tax-challenges-arising-from-digitalisation-july-2021.pdf https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
- balsamiq 5y ago
  Notably absent from the list: Ireland.
  - Mortiffer 5y ago
    Low corpate tax countries not on the list: Ireland 12.5%, Kuwait 0%, Hungary 9%, Kosovo 10%, kyrgystan 10%, Lichtenstein 12.5%, Moldova12%, Sark 0%(UK related but only had 1 active bank so perhaps they did not need it on the list ) I am surprised that they managed to get most of the typical island states on the list to convert. And it will be super interesting if Kuwait and Sark can stay strong or if new companies will take the opportunity to address this market. https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rates https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rat...
    - csomar 5y ago
      Kuwait is not really popular to headquarter your company (the UAE is), and they have lots of oil. I think it'll be hard to convince them otherwise.
deleted 5y ago
[deleted]

sand_castles 5y ago

So you are saying that the South Korean government will stop providing special subsidies to their Chaebol ? Low tax can be in the form of premium land grant, or govt provided healthcare for workers.

jessaustin 5y ago

Two-thirds of humanity, which makes sense because one wouldn't expect much overlap with the third of humanity who suffer USA economic sanctions. Different methods for accomplishing the same goals... https://sanctionskill.org/wp-content/uploads/2020/03/39SanctionedCountries3.pdf https://sanctionskill.org/wp-content/uploads/2020/03/39Sanct...

CryptoPunk 5y ago

This alone: >>The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. >>In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered. Was enough to address this concern: >>If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere. Not only can the concerns that are being used to justify a global minimum tax be addressed through other means, the tax agreement itself is a terrible policy, because it freezes the evolution of tax policy for the whole world, presupposing that an income tax, and specifically a corporate income tax, is ideal. There are structural problems with the corporate income tax, and many economists argue for eliminating it altogether, and replacing it with other types of taxes (e.g. a transaction tax, a carbon tax, a land tax, etc). But this locks it in place as a constant for all countries. It's exactly this kind of homogenization of governance that Europe had to get past to prosper: https://aeon.co/amp/essays/how-the-fall-of-the-roman-empire-paved-the-road-to-modernity https://aeon.co/amp/essays/how-the-fall-of-the-roman-empire-...

jessaustin 5y ago
As if "locking it in" weren't bad enough, the billionaires also propose to lock in the USA system that they have already completely reconstructed to their own benefit.
onlyrealcuzzo 5y ago
Corporate tax has only been evolving recently to the benefit of the largest companies primarily benefit the richest individuals in the world. It's fine if you want it to continue evolving, but I don't.
- CryptoPunk 5y ago
  This is also a form of evolution, just one that prevents the corporate income tax from being eliminated in favor of something more efficient and fair.

jbaudanza 5y ago

Imposing taxes on a legal entity always seemed fishy to me. Politically, it sounds great to say, "Make the corporations pay their share!", but who exactly are we targeting with these taxes? Is it the rich executives? Why not just raise taxes on the rich directly? I suspect in most cases the tax burden is just shifted onto the lower-income workers or the customers somehow.

eunos 5y ago
> who exactly are we targeting with these taxes? Is it the rich executives? Lot of times the money were not handed to the employee, executives included. They just stay at the company or paid to the financial company that owned the companies.
- harikb 5y ago
  At least from my eyes, recent trends are exact opposite. Stock buyback returns the money to investors (by raising stock price). Huge bonuses to executives. The company itself is managed on a very thin buffer so that a) When things go south, they can always ask the government for bail-out. Too big to fail & all that. b) Anything affecting the company, in terms of regulations, can be shown to directly affect the employees and their job. This may be a cynical take, but this is what I see.
  - ClumsyPilot 5y ago
    But investors keep their money in honding companies and trusts, sometimes registered in panama. The billions never actually have a physical person as their official owner
bradford 5y ago
> it sounds great to say, "Make the corporations pay their share!" the Global minimum tax rate is only tangentially related to the 'make corporations pay their share' problem. The real problem is a 'race to the bottom' where corporations will shop around and put tax headquarters in the country with the smallest tax rate (i.e., Ireland). > I suspect in most cases the tax burden is just shifted The big question for me is: is it really a significant tax burden? or do the companies choose nations with the lowest tax rate because they are seeking a competitive advantage, and thereby inducing all their competitors to make a similiar choice? the minimum tax rate is trying to level the playing field in this regard.

bitL 5y ago

How are developing countries going to catch up with developed ones if they agree on the same tax policies?

sbacic 5y ago
They won't and I'd argue that that is part of the plan.
onlyrealcuzzo 5y ago
China didn't need to have ridiculously attractive taxes to catch up. Corporate taxes in China were ~33% when it was growing the fastest. Just having a low-cost labor force and scale and global politics not being anti-offshoring was enough. As China becomes more expensive, I'm not sure why Indonesia, Nigeria, Pakistan, Egypt, and/or Vietnam couldn't do something similar. India seems to be in that process. Unfortunately, if you're a small, poor country like Western Sahara - I don't think tax policies are enough to move the needle.
- doomroot 5y ago
  China should be the exception in all cases. The don’t exactly act in a democratic or open way.
nicoburns 5y ago
Protectionism.

natvert 5y ago

When the benefits of creating a new country outweigh the costs (to shareholders), does it fall within the fiduciary duty of corporate leaders to form a new country?

fotta 5y ago
I'm curious if the world-at-large would recognize a corporate country though. A country is only a country if other countries recognize it as such.
- josefx 5y ago
  I wouldn't be surprised if you only needed one country to do it and then could funnel all your taxes through that complicit country. If that happened we would be back at the double Irish with an extra step. Forcing all participants to recognize the same countries could have all kinds of good or bad side effects especially when you consider China and Taiwan.
newsclues 5y ago
Why would a corporation want a country? If you don’t control the planet you’re just waiting for your competitors to crush you.
- rio_de_mierda 5y ago
  Corporate motives can usually be reduced to one of three things: cheap (ideally free/forced) labor, cheap resources, and limits on liability.
  - newsclues 5y ago
    Monopolize markets.
ClumsyPilot 5y ago
Hahaha, and then be saddled with paying for defence infrastructure and education?"

ppeetteerr 5y ago

The complexity of this agreement and its execution are incredible. Not only getting alignment from 130 members, but a system by which companies report their revenue _and the cost of the revenue_ for every country! Future tax avoidance schemes will most likely try to "divert" their costs towards high-revenue countries like the US. After all, what is the profit margin of an iPhone sold in Romania? For some context, corporate tax makes up around 7% of the US's federal revenue. While this legislation is important, it's a fraction of the overall revenue pie.

colechristensen 5y ago
How much revenue is "missing" due to tax magic?
- rebelos 5y ago
  A lot. Changes in policy cut the effective corporate tax rate down from ~40% around 1950 to where it is today. Lyn Alden covered this in an excellent post: https://www.lynalden.com/tax-shift/ https://www.lynalden.com/tax-shift/.
nabla9 5y ago
You are mistaken. It's not that complicated and does not work that way. 1) No foreign country is required to collect minimum tax. 2) If some country is not collecting minimum tax, home country tops up the tax until minimum tax requirement is fulfilled. 3) It's up to the company to show evidence that it paid minimum tax in other countries so that it's not double taxed in country where it's hq is. 4) They need to report taxes in other countries only to their home countries.
- ppeetteerr 5y ago
  Thanks for clarifying

motohagiography 5y ago

The idea that politicians and bureaucracies can defer to external international conventions to be the bad-cop for wildly unpopular policy decisions - and then claim to be powerless to stop them - is anathema to democratic principles like national representation, consent of the governed, and other concepts of human rights. This proposal seems like a global group of government affiliated people colluding to fleece each others' citizens instead of serving them. This is literally what conspiracy theorists have been predicting for decades, it's a terrible shame to make them right.

colechristensen 5y ago
I don't think the New World Order conspiracy theorists were particularly paranoid about closing corporate tax haven loopholes.
- motohagiography 5y ago
  I thought their whole schtick was "one world government," which is precisely what colluding to destroy tax competition is, as is banning capital flight which results from abusive policy.
  - axlee 5y ago
    colluding: to act together secretly or illegally in order to deceive or cheat someone. And please: capital flight being the results of abusive policy? Corporations and wealthy individuals will always try to avoid giving the fair share to the society that enabled their wealth in the first place: the case where wealth moves because of abusive policies is so marginal in the ocean of pure greed. Some countries are fiscal parasites and benefit from the theft of other societies, and this is how we deal with parasites. Should we just watch wealth evaporate away to offshore stashes, wealth that actually belongs to the people?
    - dane-pgp 5y ago
      > wealthy individuals will always try to avoid giving the fair share to the society Given that the median US household pays about $10k in taxes per year, and has a net worth of about $120k, perhaps we also need a global minimum wealth tax of say 8% per year, with a tax free allowance on the first $100m of net worth.

mustafa_pasi 5y ago

This is a new kind of imperialism. The G7 makes up the rules, under the guise of fighting tax evasion or financing of terrorist activities. Then they make all the less powerful countries comply to those rules. If they do not, they get greylisted or blacklisted by some "international" watchdog, making it much harder for those countries to participate in the global economy. Of course only the poorer less influential countries will suffer under such arbitrary rules dictated by the G7. Nobody is going to greylist the US or Germany. It is effectively a new mechanism for the G7 to encroach on the sovereignty of other countries. And if you tell me, taxing international corporations is a good thing, I agree, but it is just a pretense. Just a setup. The G7 can also just tell those international corporations to fess up the money. They have enough influence to do just that. There is no reason to include Poland, Sri Lanka or Botwana or Bolivia in this agreement. The reason those countries are included is so that later on, the same agreement can be used to blackmail those countries.

throwkeep 5y ago
You'll own nothing, and you'll be happy. https://www.youtube.com/watch?v=lBBxWtKKQiA https://www.youtube.com/watch?v=lBBxWtKKQiA
- ceejayoz 5y ago
  Sounds scary out of context, but it's hardly a silly prediction. Uber, AirBnB, clothing rental, device upgrade plans...
  - asteroidbelt 5y ago
    It is not bad as long as you own stocks, which you can exchange into material goods. Like some of my friends can afford a decent house, but prefer renting because it gives greater flexibility (they can rent a small flat in the center of the city in a walking distance to the office and meet with friends often while they don't have children instead of investing into big house in the suburbs with empty rooms they wouldn't use). But if you own nothing and don't save, this is bad. The UK did a great thing last year, they increased to minimum payment to private pension (equivalent of US 401k) to 8% of salary, so even irresponsible people will have some savings at retirement age. And I think the UK should continue gradually increasing these contributions.

okareaman 5y ago

Instead of trying to change the behavior of other countries, why not implement an alternative minimum tax for companies that do business in the United States?

asteroidbelt 5y ago
Taxes would be too hard to compute. What if a company sells a few car in the US, the car is manufactured in Germany with parts from France, and development is split between 40 countries in the world including US, how much the company should pay in the US?

krupan 5y ago

“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” Translation, "We want to have these corporations in our country so badly that we keep paying more and more for them in order to compete with the other countries that also want them. We now want to collude with these other countries to keep our costs lower." Sounds an awful lot like price or salary fixing. Who is actually going to pay for this in the end?

repsilat 5y ago
Isn't it a consensus position among economists that corporate taxation is inefficient and badly targeted? That taxes on individuals (wages, goods&services, capital gains) and on land are easier to collect and better at providing desired incentives? Really, isn't a "race to the bottom" a virtuous cycle here? Kinda weird to see Yellen -- Treasury Secretary and former Fed Chair -- making this kind of statement.
- bronzeage 5y ago
  When the majority of wealth is held by billionaire corporate owners, and the only tax they pay is corporate tax, not even selling their shares, what other option do you have to tax them?
- nonameiguess 5y ago
  Actually a common reason given for having corporate taxes is they're easier to collect since you collect from fewer payers. The biggest problem is they obscure tax burden. All tax burden is ultimately born by individuals. If you levy on the corporation instead of the individual directly, then the burden just gets divided between clients, suppliers, owners, and employees, and how it get divides ends up depending upon the relative price elasticity of demand for each of their services. When taxes are levied on individuals directly, how the burden gets distributed can instead be codified in law. At least in that sense, corporate taxes are somewhat anti-democratic. Politicians and voters are out for blood on this, but what they really want is for the owners to pay more tax. That can be better accomplished by just taxing capital gains and carried interest. There is, of course, also tremendous deadweight loss in that business decisions are often dictated by what results in the best tax treatment rather than what is economically optimal. The fact that it actually makes financial sense to entirely relocate operations to other countries is itself a pretty big indictment of taxes like this. That's a huge amount of resources being allocated in a way that does not result in any improvement to the goods and services. But, to the point of this treaty, if they're not going to eliminate corporate taxes and tax owners directly instead, the next best thing is at least make the taxes the same everywhere so the relative change in rates will stop dictating business decisions.

beprogrammed 5y ago

International solutions, for international problems of international corporations.

blhack 5y ago

The US will immediately leave this compact as soon as a fiscal libertarian takes office.

bgorman 5y ago
What fiscal libertarian has a reasonable chance at becoming president? I’m not aware of any

calkuta 5y ago

Don't governments have enough money? I think they could do with a lot less actually.

asteroidbelt 5y ago
That's what conservatives always say (but not always do): decrease taxes, make the governments smaller, give money back to people, so people will spend money more efficiently than the government.

DevX101 5y ago

Did a quick cross ref for the non-signatories ranked by GDP: https://pastebin.com/YyYTV65i https://pastebin.com/YyYTV65i I'd predict corporations to move to countries on this list that are non-sanctioned, high rule of law index, and easy to do business in. Ireland and Estonia in particular come to mind.

r00fus 5y ago
Ireland is a big hole. Many corps have huge nexus there simply to avoid corporate tax. Would the Dutch-Irish double-sandwich still work - maybe with another country?
- NoboruWataya 5y ago
  It doesn't even work right now - the rules that enabled that structure have already been phased out.
patrickaljord 5y ago
Do you have a link to the list of signatories?
purple_ferret 5y ago
signing on to this should be a requirement to stay in the EU
novok 5y ago
I'm surprised %0 taxes on everything UAE is implicitly a signatory! The list of countries: https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-members-joining-statement-on-two-pillar-solution-to-address-tax-challenges-arising-from-digitalisation-july-2021.pdf https://www.oecd.org/tax/beps/oecd-g20-inclusive-framework-m...
- lordnacho 5y ago
  That made me wonder, what's to stop a country from having a high rate but also offering a tax credit? Or some sort of disguised give-back? If you Google the Malta Corp tax rate, you find 35%. You need to dig a big more to read that actually you can get 30% refunded. Haven't tried it myself.

petermcneeley 5y ago

In the limit of free flowing capital and goods this minimum is likely to also be the maximum. This will lead to a more homogenous and uniform financial situation across all countries. A much better idea would be tarrifs. A country can tax each corporation as they see fit and what is in line with their values. They can also then have corporate or other taxes in line with their values. This would lead to a diverse menagerie of various governments and various kinds of financing. I would argue this is healthier than every country becoming the USA.

handrous 5y ago
Why would this put downward pressure on the maximum corporate tax? The current minimum is 0%. Why isn't 0% also the de facto maximum, right now? Why would raising the minimum force it to (tend to) equal the maximum?
- petermcneeley 5y ago
  ~0% is what many pay right now because various mechanisms are used to pay the tax of the lowest country tax rate. So if you enforce a minimum then likely they will pay ~min%. This is a game theory problem not an economic or political one.
  - handrous 5y ago
    Ah, so you'd propose that 0% is the current de facto minimum and maximum, and that raising the minimum is bad per se? I took your original post to mean that states would not, practically speaking, have the liberty to impose even higher rates if a de jure minimum were imposed, while currently they do, but... rather you seem to disagree with the direct point of the move itself, which is to prevent under-cutting some minimum above 0%? Or am I misunderstanding you?
    - petermcneeley 5y ago
      If the point is for every country to have the same tax rate then yes this solves that problem. Each country cannot impose a higher rate de jure for the same reason why now the effective rate is 0%.

hartator 5y ago

I rather we all agree to stop printing money.

asteroidbelt 5y ago
The comment is correct: printing the money is actually taxing the poorest: because government spends money inefficiently, and printed money end up in the richest (and worse than that, corrupt and counterproductive) people pockets. Like if you tax a next Bezos, you will have no next Amazon. But if you stop printing money, you will take money from some government contractor, who is a friend of a senator.
timbit42 5y ago
But then the house of cards would collapse.

maverick-iceman 5y ago

Will this include rebate schemes? Also Africa and countries with low enforcement (either willing low enforcement or caused by scarce public sector resources) will have capital flowing in. Once the law is there the next race to the bottom will happen on odds of enforcement of such law. Russia, Ukraine, Georgia, Uruguay, Belize, Panama, UAE, Liberia , the Caribbean. The usual suspects will continue to dominate the transfer pricing business, only they'd house foundations and 501c3 type vehicles, as well as private companies which are normally not in the authority watchlist. Such as the Trump Organization before he decided to run for President

notsureaboutpg 5y ago
What corporation wants to do all the paperwork to spend all the money to establish all the shells to reside in a country where they technically legally owe the same tax but the government is just lax in collecting it? The government can change its mind any time and start enforcing and you will owe tax and have no way out of it. Moving again won't erase history if they claim back taxes.

throwaway34241 5y ago

Apparently it's also possible to address the issue of shifting corporate profits to tax-havens even without a large scale international agreement. Basically, corporations have one place money comes in and two places it comes out, like so: sales = expenses + profits If you tax the sales, then deduct the expenses, that leaves the incidence of the tax on the profits. But importantly, unlike profits, it's usually clear to which country a sale belongs to. Where this gets complicated is international borders, the solution there is to only deduct domestic expenses. At first this seems protectionist, but according to economists changes to the currency exchange rates eventually balance out the effect and it ends up trade neutral. This idea was actually seriously proposed as part of US tax reform a few years ago (and I saw some praise from both left/right leaning economists), but it got killed because some big companies were against it. It's called a border adjustment tax. [1] Even though the above is an interesting idea this recent attempt to come to an international agreement is probably also reasonable, since it should accomplish some of the same things and getting countries to agree to a headline number is probably more realistically achievable than in-depth reform (so it's likely solutions like this or nothing at least in the medium term). [1] https://en.wikipedia.org/wiki/Border-adjustment_tax https://en.wikipedia.org/wiki/Border-adjustment_tax

tastyfreeze 5y ago
An agreed upon international base tax rate is the wrong solution. This becomes a minimum wage for nations and removes the incentive to compete to be the home of corporate headquarters. Border adjustment tax removes the tax shelter loophole and strengthens the incentive to be a good place to headquarter a corporation.
- collaborative 5y ago
  Nations can still compete. Stability, rule of law, infrastructure investment, etc. Everything except letting companies use the country as a pirate's cave
  - gruez 5y ago
    >Nations can still compete. Stability, rule of law, infrastructure investment, etc. don't forget tax incentives. Sure, every country has to charge 15% tax, but if you domicile your country here we'll give you tax credits!

orlovs 5y ago

I did not read full list of comments, but before celebrating victory of “they gonna pay”. Let me guess, many countries will change tax code that corporate tax being paid only on witholding.

slim 5y ago

OECD original blogpost : https://oecdecoscope.blog/2020/10/20/tax-challenges-from-digitalisation-a-global-two-pillar-solution-could-increase-tax-revenues-and-support-economic-activity/ https://oecdecoscope.blog/2020/10/20/tax-challenges-from-dig... Actually Pillar 2, which makes corporations pay taxes where they actually make money, is more interesting. Because if you sell my data to say swiss corporations, why would you pay taxes in switzerland and not in my country? In other words why not pay taxes where you extract resources ?

dantheman 5y ago

Such a terrible idea.

jcrites 5y ago

Honest question: what is the reason for there to be a corporate tax at all? When corporations distribute profit to their owners/shareholders, those people must pay income tax on it. Why not have the government get its share from income tax? Corporate tax seems like double taxation, and its existence seemingly means that all companies have a lower margin than they would otherwise, meaning that they need to charge higher prices to be equally profitable. For companies that sell products to consumers, one would presume this would result in higher prices for everyday items. In other words, isn't a corporate tax ultimately regressive because it causes companies that sell products to consumers to have higher prices? Companies that sell everyday items like food and essentials will pass on that corporate tax through higher prices to consumers. Meanwhile, any business owners/shareholders who receive substantial income pay income tax in the highest tax bracket for any income received from the company. Corporate taxes just seem to hurt margins, resulting in a regressive effect on the economy through higher prices, and discourage companies from conducting research and development, by again hurting their margins. Why not eliminate corporate tax and rely on income tax, or better yet a model like sales tax/VAT? There will be exceptions like business owners who start a business from nothing, see the net value of their shares rise into a billion dollar valuation, yet pay little in taxes -- however they haven't necessarily sold those shares to receive income yet, and when they do they'll be taxed at the capital gains rate. You could argue that the capital gains tax (or qualified dividend tax) should be higher, which is an entirely separate matter from the corporate tax, but if you raise that rate then you discourage prospective business owners from starting businesses, and you discourage investors from investing and holding shares in companies for the long term. The top 1% of people by income already pay 40% of all taxes. Meanwhile, the top 2-5% pay the next 20% of all taxes; so the top 5% of earners collectively pay 60% of income tax. Given this fact it surprises me that people say that the rich need to pay their "fair share". https://www.heritage.org/taxes/commentary/1-chart-how-much-the-rich-pay-taxes https://www.heritage.org/taxes/commentary/1-chart-how-much-t... (Note that this is considering income, not wealth. We don't tax wealth, and I don't personally think we should while people live, beyond generally taxing real estate to pay for the services provided near that real estate, such as roads, police, schools, etc. I have mixed feelings about the estate tax i.e. taxes paid on inheritances at death).

dane-pgp 5y ago

patrickaljord 5y ago

Next year the US will spend $715 billion on military budget alone, a $10 billion increase from last year. Shouldn't the government try to cut spending before thinking of how it could increase tax revenue? It's like an obese person wanting to lose weight while eating more each year and thinking of increasing time spent at the gym to make up for it, shouldn't they try eating less if they want to lose weight?

standardUser 5y ago
This is not about increasing tax revenue it is about preventing multinationals from evading taxes. It's similar in concept to the Alternative Minimum Tax, which was designed to prevent an ever-increasing web of exemptions and loopholes from allowing some people to pay little-to-no taxes.
- dantheman 5y ago
  Taxes aren't a virtue - they're a necessary evil. They're coercion, only paid on the threat of violence. We should be aiming to minimize taxes and fund programs through other voluntary means. So where the money is being spent should be considered when talking about how much should be raised, since it the cause.
  - 8note 5y ago
    Voluntary mechanisms only fill the needs of the wealthy, who also operate largely on coercive means(all that private property only exists by force of the government). At least taxes are by consensus, both in the amount, and what they find.
samsonradu 5y ago
No. Losing weight might read as being weaker. Why would any gov want that?
akvadrako 5y ago
The military budget is a red herring. If the budget was reduced to zero it would barely effect the deficit, yet over the long term it would probably cost more, since a weak nation invites war.

WalterBright 5y ago

There's no way one can get 130 nations to agree on anything without a stick.

LAC-Tech 5y ago

Classic anti-competitive behaviour.

neil_s 5y ago

Surprised to see the negative comments, despite HN comments' usual bent. As someone that moved around multiple countries, I was impressed by the US' tax by citizenship on global income. About time we apply the same to corporations as we do to individuals, given how much easier it is for corporations to move their income around.

aussieguy1234 5y ago

I've always considered the current system to be unfair. Most tax revenue comes from employees, while the super wealthy hire the best of the best accountants. They pay these accountants big commissions and bonuses, then they pay next to nothing in tax.

patrick451 5y ago

This is really just price fixing, which is generally considered anti-competitive and typically illegal. Governments should be subject to the same competitive pressures they impose on everyone else.

Proven 5y ago

Congratulations to Ireland and those other nations that did not support this nonsense!

limaoscarjuliet 5y ago

130 != 195 - new tax havens will crop up quickly in the remaining 65 countries. Even if unstable and not trustworthy today, trust will arrive there with money and people who deal in the tax haven services. Apologies for being cynical, but this agreement is just slight change of music in the 0% corporate tax dance.

AnonymousMonk 5y ago

I'd like everyone yo know that in the United States, such a scheme is clratly a delegstion of authority. illegal and unconstitutional, and a clear case of Treason ny all the elected and appointed people who support this garbage idea