A weapon against tax havens?
This is what the great powers of the G7 (United Kingdom, France, Italy, Canada, Japan, Germany and United States) wish to implement.
This Saturday, the finance ministers of these seven states announced a “historic” agreement on a global corporate tax rate “of at least 15%”.
Their joint statement, made at the end of a two-day meeting in London, also mentions the commitment to a better distribution of tax revenues from multinationals.
What does this agreement change?
What are its targets?
We take stock.
Why put in place this tax?
Until now, each state is free to set the tax rate of its choice for companies established in its territory.
But some countries betting on a very favorable tax system to attract multinationals eager to save money, this situation creates a competitive game.
“A race to the bottom” - in the words of US Treasury Secretary Janet Yell - which G7 members want to end.
Especially since the coffers of the States have been emptied by the pandemic, while the digital giants, which for years have managed to pay a derisory level of tax in relation to the profits actually generated, have particularly benefited from the crisis.
What does the agreement say?
The G7 countries have lined up behind a tax reform based on two distinct pillars:
The first part defines the methods of taxation of corporate profits for a fairer distribution of tax revenues.
The aim is to tax multinationals where they make their profits and no longer just where they are registered, often in countries with low tax pressure.
The measure will apply to international companies that achieve at least 10% profit margin.
The agreement provides that above this threshold, 20% of the profits made will be taxed in the countries where the group operates.
The second part provides for a minimum global corporate tax rate of at least 15%, in order to create common rules of the game and avoid too much tax competition.
Who is targeted?
The measure mainly targets large technology companies, often American, which pay derisory taxes despite profits of tens or even hundreds of billions of dollars, by being domiciled in countries where the corporate tax rate is very low, or even zero.
On Thursday, on the eve of the G7, the British daily The Guardian revealed the example of Microsoft Round Island One, a Microsoft subsidiary based in Ireland, which in 2020 made a profit of 315 billion dollars without paying any corporate tax. because she is "resident" for tax purposes in Bermuda. "A system which allows arrangements like this to exist is unethical, immoral and unjustifiable, and must change radically," notably blasted Ged Nash, finance spokesman for the Irish opposition Labor Party. .
More broadly, the measure concerns “all the CAC 40, all European multinational companies,” explained Christian Chavagneux, columnist for the monthly Alternatives Economiques, in the program “We do not stop the eco” on France Inter.
“For Europe, we are talking about more than 750 million euros in turnover per year.
"
What are the giants of the web saying?
Although particularly targeted by this measure, the Gafa are round back.
Facebook assured this Saturday that it wanted "the international tax reform to succeed", while recognizing "that it could mean" that the social network "pays more taxes and in different places", according to a statement by Nick Clegg, the director of group public affairs.
We want the international tax reform process to succeed and recognize this could mean Facebook paying more tax, and in different places.
- Nick Clegg (@nickclegg) June 5, 2021
Google, for its part, has given its “support” to “the work carried out to update the rules of international taxation”.
"We hope that countries will continue to work to ensure that a balanced and lasting agreement is finalized soon," said José Castañeda, spokesperson for the American internet giant.
Already in April, the richest man in the world, Jeff Bezos, the boss of Amazon, said he was in favor of the introduction of such a measure.
A message from Jeff Bezos.
https://t.co/ZAcpnaRu6z pic.twitter.com/81AkgVyQke
- Amazon News (@amazonnews) April 6, 2021
Why now ?
The project has been debated for several years at the OECD. But as with the end of banking secrecy initiated after the 2008 crisis, it was the United States which provided the impetus. The great powers of the G7 have indeed benefited from a renewed interest of the American administration on the question since the arrival in power of Joe Biden. US Finance Minister Janet Yellen recently embraced the idea as the Democratic administration, to fund a massive infrastructure plan, seeks to raise US corporate taxes that had been sharply cut by Donald Trump.
Several countries including France, the United Kingdom, Italy or Spain have already implemented their own digital tax in the meantime, and discussions with the United States also focused on the timetable for the withdrawal of these national measures to favor of international reform.
“This is something we have been talking about for almost a decade and for the first time today we have an agreement on the tangible principles of what this reform should look like.
And it is a huge progress, insisted this Saturday the Chancellor of the Exchequer British Rishi Sunak.
Revolution or lack of efficiency?
The US administration first mentioned a global corporate tax rate of 21% before changing its mind to 15%, a level that France considered "a minimum", "a starting point".
"In the coming months we will fight for this minimum rate to be as high as possible," said French Finance Minister Bruno Le Maire, in a video posted on his Twitter account after the meeting on Saturday.
Here we are !
After 4 years of fighting, a historic agreement has been reached with the G7 member states on minimum taxation on companies and digital giants.
France can be proud!
pic.twitter.com/eIMqjweyjl
- Bruno Le Maire (@BrunoLeMaire) June 5, 2021
The NGO Oxfam has deplored a "discount compromise". “Setting a global minimum corporate tax rate of just 15% is way too low. This will do little to put an end to a dangerous race to the bottom on corporate taxes and the extensive use of tax havens, ”reacted its director Gabriela Bucher. According to the NGO, France would be "one of the biggest losers from a rate change from 21% to 15%", with expected tax revenues divided by four (4.3 billion euros, against 16 billion for the American proposal). "At a time when the government is wondering how to pay the bill for the coronavirus, it has just let slip the opportunity to take back tens of billions of euros relocated in tax havens", commented the spokesperson for Oxfam France Quentin Parrinello.
France would be one of the big losers at a rate of 15% (vs 21%) with tax revenues divided by 4. The French political calculation is therefore extremely bad.
A 25% rate, defended by @icrict, would be a real game-changer.
cc @gabriel_zucman @taxobservatory pic.twitter.com/YfY6xkitwG
- Quentin Parrinello (@QParrinello) June 4, 2021
For Karine Uzan Mercie, tax director of the LafargeHolcim group, a "rate that is too high" could on the contrary prove to be "counterproductive": "It risks disadvantaging the poorest countries or those which do not have a large territory or a natural market and which need an attractive tax system to develop ”, she explained on France Culture in April.
“We have to be careful about the real repercussions that this can have for each country.
We are neither going to absorb the debt, nor rebalance the budget of France with these billions or a few billions that we will recover in this operation, ”for his part estimated the liberal right-wing essayist Robin Rivaton on BFM Business.
What is the next step ?
"It is difficult to say when a final agreement will be reached," admitted Rishi Sunak on Saturday. The G7 Finance agreement is a first step. The G20 of finance ministers, to be held in July in Venice, will be the second stage. This process should last several more years since, in addition to the group of 20, it will be necessary to convince the 140 countries which are working on the tax reform project within the bosom of the OECD. The challenge will be in particular to persuade States which have built their economies on particularly low corporate tax rates such as Ireland (12.5%), which has thus attracted the European headquarters of many multinationals. .
"Obviously, when you put 140 countries around the table, it's complicated," said Pascal Saint-Amans, director of the Center for Tax Policy and Administration of the OECD, on France Culture, citing China as an example "of which we can to wonder if it will join completely the consensus ”. “There will obviously be resistance, but it will be difficult to keep up. I believe in the ripple effect, ”hoped Bruno Le Maire for his part.