In this news, we discuss the A collapse of global tax talks could cost $100 billion, OECD says.
PARIS (Reuters) – The global economy could lose more than 1% of its output if international negotiations to rewrite cross-border tax rules fail and trigger a trade war, the OECD said on Monday, after countries agreed to continue negotiations halfway. 2021.
Nearly 140 countries agreed to extend negotiations on Friday, after the pandemic epidemic and US hesitation ahead of the presidential election dashed hopes of reaching a deal this year.
Public pressure is increasing on large, profitable multinationals to pay their share under international tax rules after the COVID-19 pandemic weighed on national budgets, the countries said in a joint statement.
The aim is to update international tax rules in the age of digital commerce, in particular to discourage large internet companies like Google GOOGL.O, FacebookFB.O and Amazon AMZN.O from reserving profits in countries to low tax like Ireland no matter what their clients are.
In the absence of new international regulations, a growing number of governments are planning their own taxes on digital services, which has prompted threats of trade retaliation from the Trump administration.
“The alternative to find a deal would be a trade war… The last thing you want right now with COVID-19 is to face new trade tensions, ”OECD Secretary-General Angel Gurria told reporters.
In the worst-case scenario, trade disputes could shrink global GDP by more than 1%, estimated the OECD, which led the global tax negotiations, in an impact assessment.
Conversely, new rules for digital taxation and a proposed global minimum tax would increase global corporate taxes worldwide from 1.9% to 3.2%, or around 50 billion to 80 billion. dollars per year.
That could reach $ 100 billion by including an existing US minimum tax on overseas profits, representing 4% of global corporate tax, the OECD said. Meanwhile, any drag on global growth would not exceed 0.1% in the long run.
At the same time, new digital tax rules would shift the right to tax $ 100 billion in corporate profits to major consumer countries, largely to the detriment of low-tax investment hubs where these benefits are currently recognized.
As the countries agreed on the OECD’s plans for a future deal, the main remaining issue was the scope of companies to be covered, which would then facilitate agreement on technical parameters, said the head of taxation of the OECD, Pascal Saint-Amans.
The Trump administration had insisted on an opt-in option for American companies, which was widely rejected by other countries during negotiations.
Nonetheless, regardless of the outcome of next month’s US presidential election, there was bipartisan support in Washington to move forward, Gurria said.
Reporting by Leigh Thomas, editing by Larry King
Original © Thomson Reuters
Originally posted 2020-10-12 06:16:10.