I share this from Tax Justice UK, of whose advisory board I am a member:
New analysis suggests that the UK would raise an extra £13.5 billion a year from a global minimum corporate tax rate set at 20%. This would rise to over £22 billion a year if the rate was set at 25%. Companies like Amazon, Apple, Facebook and Google could face significantly higher tax bills.
President Joe Biden has proposed a sweeping overhaul of how big international companies are taxed. This includes a new minimum tax rate which would help crack down on corporate tax avoidance.
The public is fed up with major companies getting away with paying ultra low rates of tax. A new minimum corporate tax rate would bring in billions of pounds to support public services and would deal a blow to tax dodging. As we build back from covid we should ask big business to contribute more given the support they've had during the pandemic.
The Biden administration has suggested a global minimum corporate tax rate of 21%. The Independent Commission for the Reform of International Corporate Taxation has proposed a minimum rate of 25%. Rishi Sunak has pledged to increase the UK's corporate tax rate to 25% in 2023.
So far the UK government has been silent on whether it backs the US corporate tax reform plan.
The government should stand up and support these proposals. The UK and its tax haven network have long promoted a global race to the bottom on corporate taxes - this needs to end.
A new minimum corporate tax rate would have a big impact on places like Ireland, the Netherlands and the Cayman Islands which have ultra-low corporate tax rates. The plan comes as international negotiations on global tax reform at the OECD club of rich nations gather momentum.
The analysis is contained in a soon to be published paper by international tax experts on how to implement a global minimum effective tax rate (METR) for multinational companies. The paper breaks down the expected revenue for a number of countries for different minimum tax rates based on a methodology from the OECD club of rich nations.
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The METR proposal is authored by Sol Picciotto, Jeffery M. Kadet, Alex Cobham, Tommaso Faccio, Javier Garcia-Bernardo, and Petr Janský. In advance of the forthcoming study, details of the proposal are available here.
I would add one thing, and that is that the UK's silence on this is now becoming quite worrying.
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Looks like the story is making it out via some sources.
https://slate.com/business/2021/04/joe-biden-tax-havens-corporate-global-minimum.html
It’s more concerning that the opposition parties are relatively quite about this. In fact we don’t seem to have any genuine opposition in the political or media arena.
It seems like a good idea for consensus and action among nations rather than going it alone
I suspect a minimum corporate tax rate means different things to different people.
The USA will be keen to bring profitable corporate activity home to the USA rather than seeing it happen abroad, the objective being to tax everything in the USA and allow the US Government to pick up the lion’s share of tax on profit.
I suspect the UK really wants to get a share of that tax money for itself rather than seeing it collected by the USA. A minimum corporate tax rate might discourage relocating profits to low tax areas, but it also wouldn’t encourage companies to book their profits outside the country in which they are headquartered.
As always the devil will be in the detail and I don’t think for one minute that Biden’s administration wants to come up with a regime that aims to distribute the taxes collected!
Actually the plan is to require minimum tax in the US, and worldwide as well via unitary apportionment based on country by country reporting
But this is not as cynical as you suggest
The U.K. position may be very cynical
I can see exactly why the USA would like a global minimum tax rate to discourage shifting profits overseas, but setting the necessary rules for unitary apportionment will be much more difficult!
Which is why they are simply suggesting sales by destination
Done
Now what is the problem?
This is really an example of the problems ahead …
https://www.bbc.co.uk/news/business-56565636
When the UK attempts to collect taxes from the tech giants President Biden doesn’t rejoice he threatens tariffs on UK goods. Surely if he thinks there should be a minimum corporate tax and wants that tax to be shared around he wouldn’t be doing this … ?
I suspect in reality he believes all that tax either belongs to the US companies or ultimately to the US Government.
Everybody is going to be sitting down pouring over spreadsheets attempting to work out how you apportion things to get the most for their particular government, whilst protecting their local companies from lots of taxation.
I know you thrive on the difficult, but the practical and political issues related to unitary apportionment are going to rumble on for a very long time indeed.
Times, they are a changin’