The long tax holiday that U.S. corporations enjoy when they move overseas just may come to an end. That's the latest news from the G20 summit, which hit a high point on Thursday with all of the 20 -- including China and France -- giving thumbs up to the deal. Their finance members are supposed to approve the agreement on July 9.
"Today is an historic day for economic diplomacy," U.S. Treasury Secretary Janet Yellen said in a statement. "Today’s agreement by 130 countries representing more than 90 percent of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end."
Not every country is on board. Ireland, for instance pockets a good bit of cash by being a tax haven; it has concerns about "national sovereignty" and suchlike. Other holdouts include Estonia, Kenya, Nigeria, Peru, Sri Lanka, and Barbados.
The massive, negotiation-intense agreement itself still has a ways to go. At first, the agreement was aimed at tech companies, but it now includes the top 100 corporations, those with global annual revenues of $20 billion. The tax will apply to the companies' profit margin above 10 percent.
While that opens the window for some accounting sleights of hand, there is also an exception for Amazon, which has some divisions that reach the 10 percent threshold even though the company as a whole does not. There are possible exemptions for companies in finance and manufacturing, as well as other details.
“We have also put in place a carve-out system which was a very important request from emerging countries to take into account the real, physical presence of companies on their territory and to distinguish them from tax havens where there are only empty shells," said French Finance Minister Bruno Le Maire.
All of these details are supposed to be negotiated by October. In that way, the old joke about the light at the end of the tunnel cannot be far from participants' minds: The course of true consensus never did run smooth.
Meanwhile, the United States has proposed new rules that will make it next to impossible for American corporations to dodge taxes by moving abroad. That will doubtless be top of the news later in the year.
Could this even some playing fields? Will that help workers? Will it possibly make corporations less crooked?
https://www.politico.eu/article/oecd-global-tax-deal-reached-g20/?utm_source=dailybrief&utm_medium=email&utm_campaign=DailyBrief2021Jul2&utm_term=DailyNewsBrief&fbclid=IwAR38G2EI8z9ncE41CULH_SBfAPz599pO1CkjLjz6WI_rIGE7GiEwoCretxM
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