MIL OSI Translation. Region: Germany / Deutschland –
Source: DGB – Bundesvorstand19.11.2020klartext 40/2020Multinational corporations tax fairly! So far, multinational corporations have been able to take advantage of different national laws and thus reduce their tax burden. This should be over now. With the introduction of a global minimum tax, tax havens are to be dried up and corporations are to be made more liable to pay.
Multinational corporations take advantage of tax lawsMultinational corporations can take advantage of differences between tax laws in different nation states to reduce their tax burden. For years, states have been advising the Organization for Economic Cooperation and Development (OECD) on how this can be prevented. An agreement sought for the end of the year had to be postponed to next year with an uncertain outcome. Corporations with record profits are threatening to miss a great opportunity to use corporations adequately to finance public budgets, despite – and in part even make record profits precisely because of the global corona pandemic. The focus of the EU countries is in particular on mail order companies, internet platforms and software providers, who usually only pay ridiculously little corporate income tax on their profits Tax haven location to avoid the higher tax rate at the place of value creation. According to the proposal of the OECD working group, this would in future be pointless if the tax rate fell below a certain level. Then the state from which the profits are deducted could still charge them with the difference between their own tax rate and that of others (in the tax haven). How high should the minimum tax rate be? However, the level of this threshold is hotly debated: While it is currently a base scenario with a minimum tax rate of 12.5 percent is under discussion, a five percentage point higher tax rate is also up for discussion. The difference: At 12.5 percent, up to 81 billion US dollars could be achieved for national budgets globally (excluding the USA), at 17.5 percent up to 137 billion (see graphic). However, all the more states would then have to say goodbye to their existence as tax havens for corporations. German Commercial Code / Source: OECD
The OECD is also discussing whether the rights to tax multinational corporations should be reallocated between states. The reason: So far, corporation tax is only due where the corporations are based. Countries in which they make sales but do not have a branch do not get anything from profit taxes.Different views of the EU and the USA A reallocation of taxation rights is highly controversial: On this side of the Atlantic you have mainly US digital companies like Google, Amazon and Facebook in the eye. The USA rejects a one-sided burden on these companies and even threatens retaliation. That is why the OECD proposes the inclusion of further “consumer-oriented” business models, which in turn calls European corporations on the scene to resist. We need a minimum tax rate Conclusion: A sufficiently measured minimum tax rate must come to end the destructive race for the lowest profit taxes. An agreement must neither depend on the approval of the tax havens, nor on whether one can move forward in the negotiation of taxation rights. Multinational corporations have to pay reasonable taxes.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.