The Organisation for Economic Co-operation and Development (OECD) entered into ground breaking discussions late last year in France concerning an agreed minimum rate for corporate tax across the globe. The initiative gained one hundred and thirty participant countries who all conceded to a minimum corporation tax rate of fifteen percent.
This reverberating manoeuvre will be implemented by 2023 allowing a wealth of businesses to make the necessary accommodations to ensure the repercussions on net profit margins are kept to a minimum, however, this will be an uphill climb for the majority. With large corporations gearing towards the unflattering fate of relinquishing with upwards of billions of dollars per year, a realistic fear is the impact this will have on the everyday consumer. As companies strategies to recoup from the undoubtable losses they will have no choice but to abide with, it comprehensible why the remaining nine countries were unenthusiastic about sign the agreement and refused to do so.
The global minimum corporate tax will only be applicable to multinational corporations with an annual turnover exceeding twenty billion dollars (approximately fourteen and a half billion pounds). This high standard is set to be reduced after seven years to ten billion dollars annual turnover (approximately seven billion pounds). With a major benefactor being the reduction of tax competition globally, the secretary-general of OECD expressed that the agreement will not eliminate tax competition but instead places multilaterally agreed limitations on it. Notably, the global minimum corporation tax rate does not apply to corporations operating in mining, oil, gas, or regulated financial services. With increasing international attention afforded to the environmental impact of corporations, the excluded categories may give rise to questioning with regards to the potential leniency provided to companies profiting from the production of fossil fuels.
Furthermore, discussions arose regarding the rightful receiver of the increased tax revenue, with the United States of America acceding to apportioning part of the revenue derived from Apple, Facebook, Google, and Amazon to the other countries in exchange for abolishing their tax for digital services.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email admin@audleychaucer.com or visit our Linkedin page.
Larissa Bourgi
This information was correct as of September 2021
