- 130 countries and jurisdictions agreed last week to a global minimum corporate tax rate.
- The idea is to put an end to a race to the bottom, and force multinational companies to pay a fairer share of tax.
- However, there are still a few nations that are hesitant about joining these efforts, namely Ireland, Hungary and Estonia.
LONDON — France's Finance Minister Bruno Le Maire said Tuesday that it would be disheartening if EU nations weren't unanimous in their support of a global corporate tax deal.
"It would be very much disappointing if some of the EU member states would oppose such an important agreement," Le Maire told CNBC's Steve Sedgwick.
His comments come after 130 countries and jurisdictions agreed last week to a global minimum corporate tax rate. The idea is to put an end to a race to the bottom, and force multinational companies to pay a fairer share of tax — an issue that has received special attention in the wake of the coronavirus pandemic and the subsequent economic crisis.
However, there are still a few nations that are hesitant about joining these efforts, namely Ireland, Hungary and Estonia which are all members of the European Union.
Under the deal, multinationals could be forced to pay a minimum tax rate of 15% wherever they operate, rather than only paying the majority of duties in the nations where they have their headquarters. This has allowed corporate giants to shift profits to countries with very low tax rates or with other accounting incentives.
Ireland is known for offering a low corporate tax rate, 12.5%, and the recent global tax agreement potentially challenges that. Hungary is in a similar position with a corporate tax rate of 9%.
Le Maire told CNBC that a global agreement on taxation is about "justice." "People are fed up with tax avoidance and they want the digital giants to pay their fair amount of taxes," he said.
Tech giants such as Google and Facebook would likely be hit by this new agreement given their worldwide operations, but other firms outside the tech sector would also be under closer scrutiny.
The basis for a global agreement was put together in June by the finance ministers of the G-7.
At the time they said in a joint statement: "We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes."
Le Maire confirmed that as soon as the OECD agreement is implemented, France would get rid of its national taxation on digital services.
However, there are concerns that an EU-wide discussion on a specific digital levy could derail efforts for a global corporate tax deal. The European Commission is working on a proposal to be presented in the coming weeks that would establish an EU-wide digital levy.
The idea has been discussed at the EU level for several years and even sparked a trade conflict with the United States during the Donald Trump presidency. But it regained new momentum last year when EU leaders were looking for new funding sources to deal with the economic shock from the pandemic.
Speaking to CNBC, Le Maire said the European plans are "totally different" from a digital tax.
"I think there is a necessity to explain [to] the U.S. administration what is behind a digital levy," he said, adding that it "has nothing to do with taxation on digital giants."
U.S. Treasury Secretary Janet Yellen is meeting EU competition chief Margrethe Vestager virtually on Tuesday to talk taxation. Yellen is also due to meet European finance ministers next week in Brussels.
Source: Read Full Article