Monday, June 27

A Global Corporate Tax Deal Is In The Spot – Let’s Make Sure It Happens | Nadia Calviño, Daniele Franco, Bruno Le Maire and Olaf Scholz

For more than four years, France, Germany, Italy and Spain have been working together to create an international tax system suitable for the 21st century. It is a saga of many twists and turns. Now is the time to come to an agreement. The introduction of this fairer and more efficient international tax system was already a priority before the current economic crisis, and it will be even more necessary to get out of it.

Why? First, because the crisis was a boon for big tech companies, which made profits at levels not seen in any other sector of the economy. So how come the most profitable companies don’t pay a fair share of taxes? The fact that their business is online does not mean that they do not have to pay taxes in the countries where they operate and from where they derive their profits. Physical presence has been the historical basis of our tax system. This base has to evolve with our economies gradually changing online. Like any other company, they should pay their fair share to finance the public good, at a level commensurate with their success.

Second, because the crisis has exacerbated inequalities. It is urgent to put in place an international tax system that is efficient and fair. Currently, multinationals can avoid corporate taxes by shifting profits abroad. That is not something the public will continue to accept. Tax dumping cannot be an option for Europe, nor for the rest of the world. It would only lead to a further decline in corporate income tax revenue, wider inequalities, and an inability to fund vital public services.

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Third, because we need to re-establish an international consensus on the major global issues. The Organization for Economic Cooperation and Development, with the support of our countries, has been doing exceptional work in the field of international taxation for many years. The OECD has presented fair and balanced proposals on both issues: taxation of the profits of the most profitable multinationals, particularly digital giants (Pillar 1), and minimum taxation (Pillar 2). We can take advantage of this work. For the first time in decades, we have the opportunity to reach a historic agreement on a new international tax system that would involve every country in the world. Such a multilateral agreement would signal a commitment to working together on major global issues.

With the new Biden administration, there is no longer the threat of a veto on this new system. The new United States proposal on minimum taxes is an important step in the direction of the proposal initially raised by our countries and assumed by the OECD. Committing to a minimum effective tax rate of at least 15% is a promising start. Therefore, we are committed to defining a common position on a new international tax system at the G7 finance ministers meeting in London today. We are confident that it will generate the necessary momentum to reach a global agreement at the G20 in Venice in July. It is within our reach. Let’s make sure it happens. We owe it to our citizens.

  • Nadia Calviño, second deputy prime minister of Spain, is the country’s economy minister. Daniele Franco is Italy’s Minister of Economy and Finance. Bruno Le Maire is the French Minister of Economy, Finance and Recovery. Olaf Scholz is Vice Chancellor and Finance Minister of Germany.

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