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Responding to the "lowest global tax rate" cannot be delayed again and again

2021-07-08T00:01:58.445Z


Last week, the "Base Erosion and Profit Shifting (BEPS)" inclusive framework of the Organization for Economic Cooperation and Development (OECD) and the Group of Twenty (G20) issued the "Declaration of a Two-Pillar Plan to Address the Tax Challenge of the Digital Economy"


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Written by: Commentary Editing Room

2021-07-08 06:30

Last update date: 2021-07-08 06:30

Last week, the "Base Erosion and Profit Shifting (BEPS)" inclusive framework of the Organization for Economic Cooperation and Development (OECD) and the Group of Twenty (G20) issued the "Declaration on the Two-Pillar Plan to Address the Tax Challenge of the Digital Economy", which officially announced A consensus was reached on the "lowest global tax rate" of 15%.

As of this Monday (July 5), 131 countries or regions have participated in the "Declaration", covering more than 90% of the world's GDP, including China and Hong Kong.

The "Statement" stated that the detailed implementation plan for the "Global Lowest Tax Rate" will be finalized in October this year, and participating members should complete legislation on relevant regulations in 2022 and take effect in 2023.

However, in order to avoid the "lowest global tax rate" from excessively increasing the administrative costs of local governments and enterprises, the "Statement" also pointed out that the future implementation plan will include a "safe harbor" mechanism and other simplification measures. In the early stage, it may also allow regions to postpone their implementation to foreign countries. Companies make up the "under-taxation (UTPR)" principle of taxation.

The Hong Kong government has not yet changed its slow-moving style

After the "Statement" was issued, the Financial Secretary Chen Maobo immediately welcomed the OECD/G20 announcement of the relevant international tax reform framework plan (BEPS 2.0), and reiterated that the advisory group established in June last year "will finalize the BEPS 2.0 plan technology in the OECD Submit a report to the government as soon as possible after the details."

But when there was no "Statement" at the beginning of last month, his statement was clearly only that the advisory group "will submit a report to the government after the BEPS 2.0 plan is finalized." This shows that the SAR government is still deliberately delaying explaining its response plan.

Financial Secretary Chen Maobo.

(Photo by Yang Kaili)

Moreover, although the current "Statement" does not have too many "technical details", this does not mean that the Hong Kong government can delay the issue of Xiezhong until October this year before making a decision. For example, the "Statement" bluntly stated that members do not have to adopt the "global tax prevention GloBE” principle, that is, you can choose whether to impose on the profits of multinational corporations that are under the “lowest global tax rate”, and if you give it up, it is equivalent to allowing other regional governments to obtain relevant supplementary taxes, relying solely on “accepting the plan” It is simply difficult for the public to know the government's position in this regard.

Prepare early to prevent trouble

It’s also worth noting that the Hong Kong government and most of the media have emphasized that the "lowest global tax rate" is limited to large multinational companies with a global turnover of more than 750 million euros. Local groups have set lower thresholds. Therefore, it cannot be ruled out that some foreign companies with business in Hong Kong may be affected by stricter policies in their places of origin. The Hong Kong government should never assume that other local governments will take measures on this issue. Conservative attitude.

As for other contents that have not been finalized in the "Declaration", the general direction was clearly explained in the blueprint report published in October last year.

For example, the simplified measures in the implementation of the "lowest global tax rate" are likely to include blueprints suggesting the "tax administrative guidelines" for judging areas with low risk of non-compliance. "Hong Kong 01" has previously pointed out that the SAR government should plan for Hong Kong as soon as possible. Related lists.

In addition, the report considers that there is no need to force multinational corporations to calculate the effective tax rates in various regions every year. It can even be recalculated after a grace period of three to five years after the base year reaches the standard. If the government agrees with the arrangement, it should plan as soon as possible how the local tax system will cooperate.

The emergence of "the world's lowest corporate tax" warns Hong Kong that it needs to abandon the old thinking of a "simple and low tax system."

(Reuters)

In any case, the OECD/G20 "Statement" is supported by many countries around the world, including China, which proves that the "global minimum tax rate" is indeed widely recognized and is difficult to reverse.

If the Hong Kong government really takes this matter seriously, it should not wait slowly for the so-called "technical details" to be released. Instead, it needs to prepare a multi-handed response plan for each possible situation in advance, so as to show that Hong Kong is indeed willing to follow the trend of tax reform. , It can also make the local and international markets more assured of the challenge that Hong Kong is dealing with.

How does Hong Kong deal with the world's lowest tax rate?

China has no reason to oppose the lowest global corporate tax

Hong Kong needs to maintain a simple tax system in addition to low tax rates

Corporate TaxationEconomic Cooperation Organization OECD Group of Twenty Summit Chen Maobo 01 Views

Source: hk1

All news articles on 2021-07-08

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