This Friday, in London, Biden and the Secretary of the Treasury Janet Yellen, will have dropped their proposal to establish a global tax on corporate profits, a minimum of 15% and the United States will raise it from 21% to 28%, as it was before Trump. Even so, in the United States one of every five large companies does not pay any taxes. The tax is not only on technology and digital companies, but on all the largest multinationals. The issue was paralyzed in the OECD by Trump, although most OECD countries are in favor. Germany, France, Italy, Canada and Japan applauded the proposal from the outset, and now the UK has joined. The only reasonable condition that the partners have set is that the collection be practiced in the country where the business group conducts its business and sales. They will not only pay taxes based on the head office, but also based on the countries where they actually carry out their activity.
A G7 agreement establishing a minimum tax rate of 15% – Biden initially intended 21% – could spell the end of tax havens. Also of the semi tax havens in Europe such as Ireland, Hungary, Holland and Gibraltar. The Netherlands, with a nominal rate of 5%, reproached the Mediterranean countries for being wasteful. Spain has a nominal, theoretical tax rate above 20, but the real is around 8% according to experts. In any case, the big beneficiaries are going to be France, Germany, Italy and Spain. For the finance ministers, including María Jesús Montero, it is a miracle. The deficit caused by the pandemic already has someone to pay: taxes on the profits of multinational companies. If the G-7, G-20 and the OECD approve what they have been plotting for a long time, it will almost double the collection, but the big ones paying it, not the workers or the SMEs. If political power ends up embracing the multinationals, it will be decisive in consolidating the welfare state and cementing fiscal harmonization in the European Union. “Multinational Corporations in World Development” (1973) is the UN report that half a century ago, when multinational production was already higher than the national level, concluded that it was “urgent to tax the profits of subsidiaries that it is related to tax evasion and double taxation ”.
The Commission has proposed this month an ambitious program for the taxation of companies. “Companies in Europe: Framework for Corporation Tax” is the document that aims to establish a single legal framework, will minimize opportunities for tax avoidance – read, financial engineering to avoid taxes – and support employment and investment in the single market. It also adds that “it will soon present measures to guarantee fair taxation in the digital economy; it will propose a digital tax, which will serve as the European Union’s own resources.”
Biden has now issued an executive order repealing section 230 of the US Communications Decency Act of 1996 that releases Big Tech from liability for serving as a launch pad for disinformation. Regulating the responsibility of technology companies in networks is the next step. Not stop, he’s made a kid.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.