Nearly 140 nations – from US and UK to EU, China and India – back 15% minimum corporate tax rate

The Organisation for Economic Co-operation and Development has finalized a plan on global tax laws that could lead to Big Tech paying more in taxes no matter where they operate. The deal involves 136 countries and jurisdictions that constitute about 90 per cent of Earth's gross domestic product: the US, UK, China, India, and …

[Paul Hovnanian]

These taxes ...

... still go to the local governments that collect them. Twisting Ireland's arm (for example) to increase their corporate tax rate just puts money in the pockets of Ireland. And if they should decide to spend that windfall to promote further business growth and relocation to within its borders, that's their right.

[Anonymous Coward]

Re: These taxes ...

"... still go to the local governments that collect them"

That's fine. The point of this is to help "domestic" firms compete with the properly huge big boys. For example my little IT firm seems to pay more corp tax in the UK than some whoppers. OK they pay way more rates than we do and an awful lot more NI etc. However, this is corp tax which is levied on profits and that is huge.

My firm is automatically about 10% more expensive than any of the really bigger buggers thanks to corp tax. Obviously we are worth it, otherwise we'd have no customers 8) We do staff our helpline with people who care and not wanky AI monstrosities. You do get what you pay for.

[Binraider]

Re: These taxes ...

Sounds like your outfit is one I'd rather use over some anonymous megacorp.

On corp tax - small outfits have always had to work hard to compete. Unfairly so. If dumb tender rules weren't what they are, I'd tell the big oufits to bugger off. As it is, I have to write tenders to get who I want on service levels etc - where the big boys dont get a look in.

[NoneSuch]

Explained With Geometry

This does not produce a level playing field.

It creates an inverted cone with a very slight semi-vertical angle. At the vertex is the USA.

With no further advantage to being overseas, companies will slip back to the USA to avoid the increasing paperwork and audits involved with operating overseas. US Citizens must pay tax on any income made world wide. I suspect once the corps move back, they will receive similar treatment.

The US just screwed the globe and everyone is thanking them for it.

[ecofeco]

Re: Explained With Geometry

What color is the sky in your world?

[Anonymous Coward]

Re: These taxes ... not the way the game works

The only reason why Apple, Google, Facebook etc have any presence in Ireland is that the Irish government has very deliberately ignored for decades the massive amounts of money funneled through Irish shell companies in order to reduce their tax liabilities in other countries. That iPhone you bough in California, most of the net profit pass through Ireland. Those Facebook or Google ads bough in Australia or Germany, most of the net profit spent at least some time in an Irish entity. Just resting, in the Father Ted sense.

Now MS may have a few thousand employees in Ireland. Mainly to keep the IRS off their back. But a single MS brass plate shell company in one of the leafy squares with two dozen employees has far more revenue than all other MS European operations combined. Its the same story for all the other MNC's based in Ireland. Massive de facto money laundering to reduce tax liabilities in the original country of origin.

Then there are some companies that doesn't even go through the pretense of having a Potemkin operation in Ireland. Like SanDisk. $4B revenue and less than 30 employees in Ireland. There was a Belgian pharma company even more blatant for a while. Something like $4B in revenue and 6 employees in Ireland. I can only think of one high tech company that does not have a pure tax scam operation in Ireland and thats Intel. And that originally started off as a low tax dodge back in the 1980's.

Then there is the $1.4 tillion plus funneled through the IFSC every year. But thats another story. So think of Ireland as little more than a much bigger Cayman Islands but with terrible weather.

[herman]

Re: These taxes ... not the way the game works

Ayup, if that law passes everywhere, then tbe Nigerian and Pakistani economies will boom.

[Chris G]

Re: These taxes ...

Just watching Euronews; it looks as though at the last moment a 10 year grace period was added so making it one more political joke composed of empty words.

[DS999]

Isn't it better for the EU if those taxes

are in Ireland's pocket rather than in the US's pocket? So long as Ireland can't advantage itself with lower rates than the rest of the EU is allowed to charge, even if multinationals already located there aren't going to move there will be less reason for more to join them which only helps the other EU countries.

Apple is taxed by the US on worldwide earnings, with a credit for foreign taxes paid. So every dollar of taxes Apple manages to avoid in the EU via Ireland's special deal means one less dollar of foreign tax credit and therefore one more dollar in the US treasury. And if the EU didn't think Apple paying taxes in Ireland was important, they wouldn't have gone after them for that $13 billion five years ago or whenever it was. The EU wasn't going to see a penny of that either - fighting it has COST the EU money in legal expenses, whether Ireland/Apple wins or loses.

I'm mildly surprised the US was on board with this. Since they finally closed the loophole a few years ago that allowed companies to pile up foreign earnings and not pay taxes in the US so long as they stayed overseas, fewer ways to escape taxes outside the US means less taxes paid inside the US.

Maybe the US saw the writing on the wall and figured they'd face too much pressure to go along if everyone else did. Maybe they are getting something else as part of this deal (as I'm sure it will be some massive multi thousand page treaty when finally complete with lots of stuff we won't see until it is made public) like trade or tariff perks that makes up for the loss from higher foreign tax credits.

[Anonymous Coward]

Re: Isn't it better for the EU if those taxes

> Apple is taxed by the US on worldwide earnings, with a credit for foreign taxes paid. So every dollar of taxes Apple manages to avoid in the EU via Ireland's special deal means one less dollar of foreign tax credit and therefore one more dollar in the US treasury.

Only if and when they repatriate it to the US.

From what I hear, every ten to fifteen years or so there's an amnesty that lets them bring back huge wodges of profit with next to no tax paid. So they just accumulate it off-shore until the next opportunity comes along.

[DS999]

Re: Isn't it better for the EU if those taxes

Only if and when they repatriate it to the US.

Not anymore. The law was finally changed a few years ago, now they are taxed on overseas earnings (above a certain threshold far too low to be relevant for big tech companies) regardless of when/whether they are brought back into the US.

[Anonymous Coward]

Re: Isn't it better for the EU if those taxes..nope

First the Apple case was special. They had been just been taking the piss for decades. They had created a tax entity that was foreign domiciled on both sides of the transaction. Apple had created the tax equivalent of the Heisenberg Uncertainty principal. No matter where you looked the destination point of the transaction was always somewhere else. They had moved the revenue recognition point for taxation purposes from normal space time into a purely quantum space. Where transactions are tax free.

The EU lawsuit was basically the legal equivalent of telling Apple to stop playing silly buggers. And because the Irish economy is just the MNC tax evasion sector plus government expenditure (and a tiny rump real economy) the Irish government spent years refusing to take the $13billion plus owed. Last I looked the money was stuck in the equivalent of escrow. The Irish government not wanting to touch it. So as not to frighten away the rest of the rest of the MNC "guests".

When Apple made everything not in China (US / Singapore /Cork) it took real effort to keep worldwide tax below the usual 35% Fed rate. Once everything was made in China and all the i.p moved off shore then the net amount that got the 35% Fed treatment dwindled to very little. Where do you think those unfeasibly large net margin for what is basically low margin consumer electronics come from.

The stuff that Treasury does for these BigTechCorps tax evasion is pretty straight forward compared to some of the stories I've heard. One of the best stories is how one can vest very large amount of stock without causing a tax event by structuring the vest as a very ingenious repo wrapped in a derivative. Say $50 million cash from stock vest, zero tax bill. Even better than how the senior guys at MS once "repatriated" one of the large offshore piles of cash so that it was wrapped in financial instruments that only benefited the senior guys. There was some tax payed on transfer but not that much. Basically money found behind the sofa for these guys. Maybe $10M each.. Max. For many billions asset transfer.

Now the one that always got me is that the US has had very strict Excess Retained Earnings rules for decades with vicious penalties which are rabidly enforced by the IRS against small family businesses and such like. If the IRS decides it does not like that couple of $100K's of cash you keep in your business rainy day account then its up to 80% tax and penalties. But stick $30 billion $40 billion (and more) untaxed income in a distributed shell companies SPV in Ireland / Netherlands, etc - no problem..

That how the international tax for high tech MNC actually works. And has for decades. Thats why Creative Accounting is called Creative Account. Its actually a lot more creative than financial engineering. In my experience. And financial engineering can get very very creative.

[DS999]

Re: Isn't it better for the EU if those taxes..nope

Apple has been the largest US taxpayer for a number of years now. They may have been able to reduce their tax bill with the various games they and all big companies used to play with overseas earnings to prevent that being taxed, but pretending that "very little" of their income was taxed is nonsense.

Even before those games ended (at least as far as avoiding paying taxes in the US on those foreign earnings) with the tax bill passed a few years ago, they were still paying more taxes in the US than any other company.

[Anonymous Coward]

Re: Isn't it better for the EU if those taxes..nope..wrong

Actual tax payed to IRS in 2020 would not get Apple even in the top ten corporate tax payers. So I dont know where you got this "Apple largest US corporate tax payer" idea. From a PR person in Cupertino perhaps.

Just looking through the last 10K. For 2020. The fun tax stuff is around P49. They claim an effective tax rate of 14% but when you look at the number which was the actual check cut for the IRS in financial year 2020 it was below 5%. Around $3B. Once you had unwound all the usual accounting swings and roundabouts. Some of us have been reading 10K's since the 1980's (for Apple and others) so know exactly where to look for evidence of how the bodies were buried.

For the actual stated (lowballed) net earning the Federal Tax should have almost ten times the amount of net cash Apple paid to the IRS in 2020. Without the tax code chicanery not available to us mere mortals.

And we wont even go into just how much the CA Franchise Tax Board was screwed out of. All the state pretty much sees is the 7.25% sales tax on in-state sale.

For reference Evil Big Oil pays around 30% of net on their US operations. And that is after over 140 years of trying to game the system.

[The Original Steve]

Re: Isn't it better for the EU if those taxes..nope

The largest company pays the largest amount of tax... well of course it does.

I pay considerably more tax than my partner does, as I earn literally 5 times her salary gross. Even if we paid the same percentage of tax (which of course we don't, she pays the "normal" rate and I pay the "higher" rate), then I would pay considerably more tax than she does.

The point is that Apple (along with most other major multinationals) pays less tax per $ earned (or per $ of profit) than a medium or small business would pay.

Using my salary as an example, I pay around £28k on income tax per year. She pays £1,600 a year. Instead, if I ended up paying just £5k a year on income tax (with the same salary as I do now when I pay £28k income tax) then you could say that I pay considerably more tax than she does and I'm the largest tax payer in my household. That's true, but it's also utterly immorale and misses the point. Per £ earned I'd be paying far LESS tax than my partner does, even though I earn considerably more than she does.

With Apple being the most profitable, most cash-rich and the higest market cap. company in the world it SHOULD be paying the most tax in the world. However if it's 1000x larger (by profit) than "Bob's Phones Ltd" yet it's total tax liability is around the same then clearly something is wrong.

Just because the most profitable company in the world pays the most amount of tax doesn't mean it's paying it's fair share of tax. It's kind of expected that it'll pay the most corporation tax (which is a tax on profits) when it's the most profitable company in the world.

[Citizen99]

Re: Isn't it better for the EU if those taxes..nope

Upvoted for the analogy.

[jake]

And who pays those corporate taxes?

That's right ... they pass them along to their customers.

That's YOU, consumer.

[StewieGriffin]

Re: And who pays those corporate taxes?

Not if I don't use their services I don't. And I don't.

[Dinanziame]

Re: And who pays those corporate taxes?

If you use the services of a company that use their services, e.g uses Microsoft Windows, or buys ads from Google or Facebook, they'll pass on their increased costs to you; don't you worry about that. No man is an island, as they say...

[Steve Davies 3]

Re: And I don't.

Yes, you do. Try doing any surfing of the internet and not use at least

googletagmanager

all those lovely frameworks will often call services from Google, Facebook and the other usual suspects without you knowing. Those lazy devs....

There are lists of Google, Facebook, Twitter etc domains out there. Use them and add them all to your hosts file. Then you will soon see the stranglehold that the likes of google have on the lives of each and everyone on this planet.

[StewieGriffin]

Re: And I don't.

Sure, I know that but I mean not BUYING any services from them. How are they going to charge me more (as an end user) when they monitise my data (well as far as they can) in lieu of a cash transaction

I suppose they could start charging for certain services but if they do their end user count will surely go down. Less data to monitise and since this is their primary business model they are unlikely to go down that route (at least in the short term)

[Dr Paul Taylor]

googletagmanager

Permanently blocked in NoScript, apparently without any problem.

[veti]

Re: And who pays those corporate taxes?

How exactly did you post that message? Whose computer and internet connection are you scrounging? Who do you think hosts the server you posted it on, who keeps it up, who maintains the internet infrastructure you're using right now?

Good grief, how naive can you get.

[Anonymous Coward]

Re: And who pays those corporate taxes?

Of course the costs are passed down to the point of sale. That's how money works.

The point is that all companies pay their dues ie that a fair levy is raised from all sales, regardless of whether it is one of my bods setting up a switch stack for a customer or Facebook shovelling out 50M ads per second.

I'd like to think that MS and FB and Goog and Apple and co all pay the same corp (within reason) tax as me. Why should my company be 10% more expensive than FAANG? I live in the UK but can't afford and don't want to piss around with the "irish double dutch sandwich" thing or whatever it is.

This will briefly cause a measure of inflation, most of which will be absorbed. Salaries may increase a bit and welfare payments may get increased a bit (eventually).

When it comes to worldscale financials, you have to stop thinking like a person with a bank account and an income and a cheque book etc and start thinking like an organisation (a sovereign country) that can quite literally print money. Did you know that the UK only paid off "Lend lease" in around 2006? We had a recession in 1991 which was pretty shit (>10% unemployment in several areas - laughable in some parts of the world) and of course another one in 2007 as the world discovered that selling debt only works so far. Our politics was basically about how nasty the cuts were when Covid-19 hit. The cuts were to reduce national debt which had got a bit out of hand.

Then Covid-19 hits and within a pretty short period of time £1.5T (yes trillion) was found down the back of the sofa. The UK is not the biggest economy ever but we do seem to have a pretty decent credit line.

Money is a complex thing and yes we do all pay ... eventually. I think you are old enough (like me) to remember when a dollar bought a lot more than it does today. I remember when a USD was worth something like 50p and a DM was 25p (70s), I also remember French francs (10p) and Dutch guilders (nearly the same as DM) and lots of other currencies. Dutch notes were the prettiest in Europe. Aus also did some beauties at that time. My parents remember rather stranger numbers, eg the Reichmark.

Fiat money is simply about trust and the number today. It is a pretty slippery concept and its best to not look too closely. You might scare it off.

[StewieGriffin]

Re: And who pays those corporate taxes?

"Of course the costs are passed down to the point of sale. That's how money works"

Absolutely, but this is a very simple interpretation of what, you point out yourself, is a complex issue.

Just my two cents but, if a company making a product increases prices then it is more than likely it will hurt demand. At that point you have to look at your accounts/sales and decide whether it is better to make savings elsewhere to mitigate the hit, cut dividends to shareholders, etc. You can't just rely on punters having more cash to spend because they've had a pay rise.

Case in point. I bought a Dell Ultrasharp during lockdown, I see the price has increased from around £180 to over £250 from the same retailer. (I was checking my warranty status because I discovered a dead pixel) Would I have bought it @ £250. No. It's that simple.

Sometimes costs have to be absorbed by business to protect profitability. That's how money works as well.

I suspect though, that for some items, you are right. Goods where we don't have a choice but to buy them. E.g. Food as we are seeing in the UK at the moment. Increased cost of recruiting HGV driver passed down the line to consumer.

[Chris G]

Re: And who pays those corporate taxes?

Don't forget that ultimately the market decides, even a monoply will suffer if its prices exceed its utility, customers will ration their spending if a product becomes very pricey even on necessary items, if there are alternatives that offer comparable or nearly comparable products many will move to them.

Once a customer has moved, it is very hard to win them back.

My only worry about this tax move is that many of these companies may try to cut corners on staff pay and benefits. Although that may benefit them in the short term it will hit employees hard, in the longer term it may hit the company's ability to hire the best staff and affect profitability but most companies don't appear to look much beyond the next quarterly statement.

[Anonymous Coward]

Re: it will hurt demand

unless you sell things like bread or electricity. Sure, people might go without, but not for long. Unless this is one way to solve overpopulation issue.

[Charles 9]

Re: it will hurt demand

There are other ways to pivot. People could switch to corn or rice or potatoes, home power production could boom, etc...

[AVR]

Re: And who pays those corporate taxes?

If the corps don't pay their taxes then you're paying them instead - directly, or via reduced services, or via money added to your nation's debt.

[bombastic bob]

Re: And who pays those corporate taxes?

how about if gummint JUST STOPS SPENDING AND RE-DISTRIBUTING SO MUCH MONEY?

[Pascal Monett]

If government just stops spending you won't have schools, roads, hospitals or much of anything that you don't pay for yourself.

For fucks' sake, this is not about government. This is about multi-billion dollar behemoths sitting on their billions and not contributing to said schools, hospitals or fire stations.

[Anonymous Coward]

Re: And who pays those corporate taxes?

Jake, you are not an expert on literally everything. It's interesting why you feel the need to weigh in on this.

It isn't Linux

I suppose you could make a tenuous link to IR35... Maybe.

Small blessings... You didn't append a massage boring life story.

[bombastic bob]

Re: And who pays those corporate taxes?

and investors as well - higher corporate taxes mean lower dividends, lower stock value.

corporations do not actually pay tax. Only people pay it. And if you have a retirement fund, chances are the yield will go DOWN as corporate taxes go UP. After all, retirement mutual funds often have stocks as part of their portfolio.

bullet meet foot. How's that "soak the rich" thing working for ya???

icon because facepalm

[Charles 9]

Re: And who pays those corporate taxes?

But don't you know? Corporations ARE people according to some legal interpretations.

[Trollslayer]

Re: And who pays those corporate taxes?

It is to try and level the playing field for domestic competitors.

[codejunky]

Re: And who pays those corporate taxes?

@Trollslayer

"It is to try and level the playing field for domestic competitors."

A desirable goal but one that often results in the undesirable increase tax/burdens instead of reduce the tax/burden for the domestic.

[Arthur the cat]

Re: And who pays those corporate taxes?

That's right ... they pass them along to their customers.

That's wrong … very little, if anything, of it hits the customers, unless the company is an unregulated monopoly or in a cartel (both of which are frowned upon).

The impact of corporation tax is felt by a mix of employees and shareholders – employees get lower pay, shareholders get lower dividends. How the balance between the two works out depends on how mobile capital is wrt taxation. In the case of the US, where Uncle Sam demands his pound of flesh wherever the US citizen lives, the tax incidence is higher on shareholders. In the rest of the world, where only the domiciled are taxed, the impact is mostly on employees.

As such, corporation tax is often a political gesture rather than an effective tax. You tax the company profits at 15-20% rather than the higher paid employees' salaries at 40-45%. (Add NI in the UK.)

This is all very basic economics.

[adam 40]

Re: And who pays those corporate taxes?

Quite right, corp tax is on profits. not turnover.

Customers pay turnover. You might be thinking of VAT - that would affect customer prices.

[ecofeco]

Re: And who pays those corporate taxes?

Not sure what your point is. Price always go up no matter what.

This way, at least the citizens get something back from it in the way public services. Or did you forget that part?

[niio]

The deal involves 136 countries, the US recognizes 195 countries as sovereign nations. Any bets that some of the 59 non-signatories magically see corporate growth?

[StewieGriffin]

It'll be interesting to see how it works in practice.

I bet PwC, Ernst & Young et al. are on the case.

[Danny 14]

the difference is, lets say Uzbekistandecide not to play ball. US and EU can make life very hard for Uzbekistan, not so much with Ireland. So they might not get onboard but would you want to move the HQ and wealth of your mega corporation to Uzbekistan?

[StewieGriffin]

You don't actually need to move the operation. Just get a postbox in the country. It's how its been done for years. Will this stop that method? Who knows.

[veti]

Clearly the competition will abruptly switch from "lowest corporate tax rate" to "most relaxed accounting standards". It's not hard to see how that will work.

[Steve K]

IFRS

Clearly the competition will abruptly switch from "lowest corporate tax rate" to "most relaxed accounting standards". It's not hard to see how that will work.

Not really, by and large, corporates (particularly publicly quoted ones), must adhere to IFRS and can't pick and choose Accounting regimes.

[Anonymous Coward]

A plan for a plan

"Annex. Detailed Implementation Plan This Annex describes the work needed to implement the two-pillar solution described in the body of the Statement. It also sets out a timeline for that process, including the key milestones for the Inclusive Framework (IF) going forward,"

We have a plan to make a plan! And if our plan-plan fails we cannot implement it!

But first we do this:

"The MLC will require all parties to remove all Digital Services Taxes and other relevant similar measures with respect to all companies, and to commit not to introduce such measures in the future. .......No newly enacted Digital Services Taxes or other relevant similar measures will be imposed on any company from 8 October 2021 "

i.e. a removal of all digital taxes and agree to not implement any future digital taxes.

Saw you coming.

[veti]

Re: A plan for a plan

Oh great. An agreement with a rider attached to forbid what's pretty much the only plausible effective way of enforcing it.

[elsergiovolador]

Nothingburger

Big corporations are in control of declaring profits and so Corporation Tax is essentially voluntary.

This is more like an event to get idle bones together, pat themselves on the back, eat some top shelf food and get those PR points from misled public.

It changes nothing for big corporations.

[Anonymous Coward]

Re: Nothingburger

I'm not sure you understand how profit and loss accounts work.

[Yet Another Anonymous coward]

Re: Nothingburger

I'm not sure you understand how much hypermathematics have been advanced by their research into accounting rules

[Andy The Hat]

Re: Nothingburger

"Profit" is the key word.

At present Amazon Uk pays Amazon Eu and both pay royalties to Amazon in Ireland (for instance) who pays royalties to territories such as BVI tax havens. Are these tax havens shutting down? Is the use of IP payed to a circus of umbrella company to 'legitimately' reduce declared profit going to be stamped on?

A standard rate of tax levels the playing field for governmental tax income within the signatories' juristictions but the agreement in itself only unplugs one machine in the mega-corp money laundrette ... I would guess the total tax take by the companies will not change significantly.

[ecofeco]

Re: Nothingburger

LOL wut?

Every heard of auditors?

[Charles 9]

Re: Nothingburger

Ever heard of bribes? Over heard of human nature?

[W.S.Gosset]

Delaware?

I wonder if this will capture Delaware, one of the world's great hidden-in-plain-sight Financial and Secrecy havens?

[katrinab]

Re: Delaware?

Delaware has no state corporate income tax, but there is still federal tax to pay.

The problem is that the US taxes companies based on where they are registered. Most other countries tax based on where economic activity takes place.

So if for example, Apple were to register a company in Ireland, and undertake the economic activity in Texas, they would pay no tax in Ireland because there is no economic activity taking place there, and pay no tax in Texas or the US because the company isn't registered there. They did actually do something along those lines.

[W.S.Gosset]

Re: Delaware?

Delaware also has corporate Secrecy provisions which approach Switzerland's in practical effect.

If you're interested, the EU equivalent is Luxembourg and the UK equivalent is the Isle of Man. At least financially -- not sure about the secrecy aspects. (I believe Jersey & Guernsey are yesterday's men, due to signing up to be good citizens.)

[W.S.Gosset]

Re: Delaware?

Oh and: Re your Apple vs offshore subsidiaries example:

That's actually completely standard for American multinationals. ~100%. Some actually flip their ownership structure to have the US parent become the subsidiary, effectively re-domiciling for tax purposes (there's a standard term for it I can't recall right now - "reverse domiciling"?).

Leading to a HUGE amount of profits parked/trapped offshore. "How huge?" Trillions of dollars huge. One of the apparently-minor things BBEG Trump did in his corporate tax shakeup was offer a temporary tax discount on bringing those funds back to the US. That brought over $1 trillion dollars back into the US tax system (and economy). And that's only about 50% -- there's still an estimated US$0.5 to $1.5 trillion still parked away from prying eyes/tax-officials.

[W.S.Gosset]

Scratching my head a little

Unless they create and impose a statutory definition of Profit, or more correctly and specifically override Transfer Pricing with some statutory formula, I am utterly baffled as to what effect this can possibly have.

As it stands, there'll be exactly the same local profits (artificially depressed) and exactly the same money flowing to exactly the same tax-havens, because the haven countries are not going to be signatories.

Ie, it's all just theatre.

Am I missing something?

[Blane Bramble]

Re: Scratching my head a little

Yes, some of those tax havens are signatories.

[Charles 9]

Re: Scratching my head a little

But NOT ALL of them. And the ones that don't will suddenly get a lot of attention. And if they're like Ireland with low operating expenses and little need for foreign goods, there will likely be few ways to put any real pressure on them.

[W.S.Gosset]

Re: Scratching my head a little

Exactly.

It's a little like saying "we HAD 20 zero-day exploits open ; now there's only 15 ; so we've FIXED it."

Baffling.

[Anonymous Coward]

"There is a caveat: this minimum tax rate will apply to companies with yearly sales above €750m"

I hope this doesn't mean there will now be a flurry of incorporation of new companies, named GOOGLE_000000 to GOOGLE_999999, each with sales precisely limited to €749,999,999.99...

[bombastic bob]

Tax applied based on REVENUE, and NOT PROFIT? As in, EVEN if the company LOSES money they have to pay the tax ANYWAY?

Watch 10,000+ people lose jobs just to pay the tax at some point... and it won't be EXECUTIVES.

[herman]

There is a concept of a General Sales Tax (GST), as opposed to a VAT. Each has merrit.

[Sixtiesplastictrektableware]

Gotta go along with the long-standing Bomb-Bob.

Tax the top sounds good, even better if you don't see any immediate connection. But anybody doing business with the top (and then anyone doing business with them and so on) gets the buck passed down to whosoever is at the bottom.

My father has always told me "there is no such thing as a complicated system, only a series of simple systems."

P.S. I am entirely unqualified to comment as I am, in fact, talking out my bailiwick. Prob'ly should've led with that.

[Solviva]

Sure they breached the €750m sales threshold, but unfortunately made a loss so no tax to pay.

[Boris the Cockroach]

Wow

that will make a lot of difference to the cash stashed away in those OFFSHORE TAX HAVENS

Do something about those first, so that the billions stored away there can be properly taxed, and then distributed to the shareholders.

More cash for government + more cash for investors + more cash for pension funds = more cash circulating and therefore more economic activity as the money goes round and round the economy.

Unlike 'trickle down' where the rich just buy a bigger glass to stop anything spilling over and trickling....

[elsergiovolador]

Re: Wow

Money is squeezed from the bottom to the top (small businesses have the highest tax burden, big corporations pay nothing in comparison), then this money gets into VC funds which then decide who gets to do business and who doesn't by regulating access to funding. It's the total opposite of free market and successive corrupt governments let this mechanisms to grow.

I think VC funds and offshore accounts should be seized and used to rebalance the tax system, so that the everyone gets equal chance at their own business, in the true spirit of capitalism.

[Anonymous Coward]

Re: Wow

Years ago I worked for a UK company that sold products in the US, the "cost" of the products sold was high so that the UK company wasn't making money, but if the US company made a profit then they were billed "administration" costs every December so that there were no taxes paid in the US. The owners have all retired now to their country estates.

Changing the minimum corporate tax rate means that accountants will make a lot more money.

[Anonymous Coward]

Let's see how the world's largest companies wriggle out of this one

as usual, i.e. easily and quickly

[Dark Eagle]

Double Irish Dutch Sandwich

Sounds like a sex position to me.

[Phil O'Sophical]

Re: Double Irish Dutch Sandwich

They'll be taxing that soon as well.

[elsergiovolador]

Re: Double Irish Dutch Sandwich

They already planning unrealised gains tax. Basically a yearly tax from the profit you would have made if you had sold your investments that year.

[Steve K]

Re: Double Irish Dutch Sandwich

That's a long time coming too...

[Snowy]

How many

tax havens not signing up?

[Anonymous Coward]

That is after we make use of loopholes, offshoring, and evasion to minimize the actual tax base in a nation, though, right? So Facebook would only pay that 15% on say, a billion dollars instead of several...

[Anonymous Coward]

There is another side to this, with that many countries on the list, it helps pave the way for corporations to start shopping for the lowest area. Before it was legal but frowned upon and now these corporations can view this as a blessing to incorporate elsewhere.

It also puts a halt to the Biden agenda....

"Among the many components of the Biden tax plan are an increase in the corporate tax rate to 28% from 21%"

So while this agreement says at least 15%, trying to raise corporate taxes to 28% will just encourage corporations to incorporate elsewhere. They do have the means, the money and the now an incentive. They will pay about half of what is proposed if the tax rate is upped to 28%.

[Medixstiff]

Back in 2010 when the AUD was at parity with the USD, I had to buy a copy of VMWare Workstation.

On the US site is was $199AUD and the AUS site it was $299AUD.

So I bought it from the US site. Not even a few days later the other techs all were forced by the US site to redirect to the AU site and pay the higher price.

Now considering there's no support in that pricing, that was just pure greed on VMWare's part and if there was a way I could live without needing at least some of their products for work, you bet I would do so.

[naive]

Why is this all so difficult ?

It is weird that tax authorities allow a mechanism where companies are allowed to reduce their taxable profits by paying money to legal entities they own them selves or have any influence on.

If that would be outlawed, profits stay where they are generated and can be taxed.

Payments to keep money losing sub enterprises afloat would have to be paid from the profits after taxes, and not before.

As a simple employee I can not make a fake company on the Cayman Islands, having it send bills to reduce my taxable income, so why can Big Tech ?.

Governments should stop discriminating real people and treat all legal entities the same when it comes to taxes.

Companies already have a big advantage that they can subtract all the costs from their profits, where I live, I am not allowed to deduct costs for the car from taxes.

[hammarbtyp]

Now we know why Bezo's is so interested in space.

In space no one can hear you hide your taxes

[Zolko]

"Tech" firms ?

Eight of the top ten companies in the world by market capitalization are tech firms

I have an issue with that: Amazon and Alibaba are online retailers, in what sense are they "tech" firms ? Google and Facebook are advertisement brokers, in what way are they "tech" firms ?

There is less "technology" in these companies' products than in a modern car. Apple and Tesla, OK, they DO technology. But Facebook or Alibaba : what innovative "technology" do they implement ?

[x 7]

Isle of Man, Channel Islands

I foresee a jurisdictional argument looming.

The UK is responsible for the foreign relations of the Isle of Man and channel Islands - so responsible for any tax treaties.

However the UK does not control the islands tax laws. We could be heading for a legal collision with the UK imposing laws on the islands, ending their tax haven status

[PhilipN]

Won’t work

First there is no law anywhere which says, as such, every company pays tax. A company pays tax only when it falls within the terms of the particular tax code. The notion that you must pay tax somewhere is in isolation nonsense.

Second, rules differ from one territory to the next - duh - as to how tax is assessed and collected. So it is dead easy as proven for company X to set up an invoicing operation in a territory where such activity is not taxable in the first place. If it is not fundamentally taxable then the magic 15% does not apply.

SO anti-avoidance measures. Every high tax country does that already. Uncle Sam had rules against shifting profits to a lower tax area - a higher tax area was OK - Subpart F Income for aficionados. And all this will still be necessary if company Y wants to pay 15% instead of 25%.

So much b****s being written about this.

And don’t get me started on the Pandora Papers! NOBODY keeps money in Belize. Every likelihood it is sitting in a Citibank account in NYC. More nonsense.

[ecofeco]

But it's moot innit?

Because it will never happen.

https://www.theguardian.com/commentisfree/2021/oct/06/offshoring-wealth-capitalism-pandora-papers

Trashing the planet and hiding the money isn’t a perversion of capitalism. It is capitalism