In October 2021, 140 countries agreed to implement a global minimum tax on businesses. This 15% tax on the profits of multinationals is supposed to put an end to the race to the lowest tax bidder which deprives States of the resources they need.
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Three years later, theglobal minimum corporate tax adopted by the Organization for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) comes, in part, into force. Partly only because of the approximately 140 signatories, not all have yet ratified it, and among them the two largest economies on the planet: the United States and China.
The Biden administration is nevertheless in favor of it, but the Republicans who partly control Congress are fiercely opposed to it. But whatever ! Starting this Monday, January 1, 2024, the European Union, including Ireland and Luxembourg, the United Kingdom, Canada, Australia and South Korea, among others, will apply a minimum tax of 15% on the profits of large multinationals. Impossible to escape it.
These countries are also authorized to tax large companies which make profits on their territory, but which are fiscally based in a non-signatory country. If, for example, a company only pays 3% on its revenues because it has its headquarters in a tax haven, the states in which it operates will be able to recover the shortfall.
The OECD hopes this will bring in up to $220 billion a year for states. If the measure is welcomed by some economists, others are less optimistic, stressing that competition between states could simply take other forms by, for example, granting subsidies to businesses.
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