The 20 largest of the planet have agreed today in Venice the ‘global minimum tax’, a rate of 15% percent that affects a large part of the multinationals, those with an annual turnover of at least 750 million. There is a coincidence in pointing out that it is a historic agreement of the economy ministers and central bankers of the G-20, meeting on Friday and Saturday at the Arsenal in Venice under the presidency of Italy, by giving free rein to the agreed initiative by the G-7 nations last month and backed by 130 countries (representing 90% of the world’s Gross Domestic Product) in talks organized by the Organization for Economic Cooperation and Development (OECD) in Paris earlier this year. month.
Spain has supported in the G-20 «the historic agreement reached within the framework of the OECD to move towards a fairer and more sustainable tax system, in a meeting marked by economic recovery and work to strengthen multilateral economic cooperation in the face of new global challenges ”, according to the Ministry of Economic Affairs.
Its head and new First Vice President of the Spanish Government, Nadia Calviño, has valued the agreement reached after years of negotiations and a very active work by Spain in the multilateral framework to reach an agreement. “This is an unprecedented agreement to try to establish a more just and robust system at a global level, adapted to the 21st century. It is a historic agreement, but it is not the end of the road, it is the beginning of a process in which we must continue to work at global and European level, “he said.
The ministry explains that this agreement establishes new rules to reallocate the profits of larger multinational companies to the countries in which they operate, even if they do not have a physical presence, as well as the establishment of a global minimum corporate tax rate. This political agreement opens a negotiation process to close technical elements and allow more countries to join before the meeting of G-20 heads of government in October in Rome.
In Venice, the European Commissioner for the Economy, Paolo Gentiloni, said that “I am proud to participate in a historic day, with the agreement for a reform of the global treasury.” In the same vein, French Minister Bruno Le Maire has expressed himself. “It is a tax revolution”, the key objective of the reform is to prevent multinationals from establishing themselves in tax havens.
In the final communiqué of the G-20, whose countries represent 85% of the planet’s Gross Domestic Product (GDP), it is urged, which sounds almost like an ultimatum, that all nations, in the OECD or in the European Union , are adapted to the measures approved by the 20 greats of the planet. It is a clear warning eight countries that oppose the new rules: Three are European – Ireland, Hungary and Estonia -, in addition to Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya. Some countries, such as the Bahamas and Switzerland, with a reputation for low taxes and investment centers, have also signed the agreement.
Soils will be tied up
Some fringes remain to be finalized or some technical problems of the agreement have to be resolved. But he is expected to finish tying up those loose ends at the G-20 leaders’ summit in Rome next October. In some countries there are obstacles or reluctance. For example, in the United States it is likely that President Joe Biden, the great promoter of this initiative, will need the approval of Congress for at least some points of the agreement. Kevin Brady, a prominent Republican in the House of Representatives, has described the agreement as “a dangerous economic surrender that sends American jobs abroad.”
Another country that puts up resistance is Ireland, where a corporation tax of 12.5% is applied, therefore less than the 15% of the agreement in the global reform of the treasury. Hungary, too, could put obstacles in the European negotiation in Brussels, where unanimity is required. Prime Minister Viktor Orbán lowered taxes from 19% to 9% to attract international investment. Given the reservations of some countries, French Minister Bruno Le Maire said he was sure that “dubious” nations such as Ireland and Hungary would be convinced before October. For his part, German Minister Olaf Scholz has warned that “countries that are contrary will have to adapt to the new agreement.”
In any case, the new global tax is expected to be put into practice in 2023. When it comes into force, the ‘web tax’, that is, the digital fees that have recently been charged, would have to disappear, as requested by the United States. some countries, such as Spain, France and Italy, to the large multinationals: Facebook, Apple, Google, Amazon, Apple and others. Brussels had planned to impose a tax on digital behemoths, whose legitimacy the United States rejects. In this regard, the European Commissioner and Gentiloni have specified that “we are working to define it and it will undoubtedly be consistent with international agreements, it will not be discriminatory and double taxation will be avoided”.
According to calculations by the Organization for Economic Cooperation and Development (OECD), the “global minimum tax” could generate added income to countries worth around 150,000 million euros, which today largely escapes the treasury. Italy could raise more than 6,500. These amounts are much higher than those that are now entered through the ‘tax web’, which in the case of Italy will allow 590 million euros to enter this year (in 2020 with this tax Italy only collected 233 million, compared to the 780 million that had been planned).