TIMES.KY

Cayman Islands, Caribbeanand International News
Friday, Mar 29, 2024

OECD tax chief uses Cayman to illustrate minimum tax rate

OECD tax chief uses Cayman to illustrate minimum tax rate

The Organisation for Economic Co-operation and Development is going to release a proposal for global corporate tax reform before the next meeting of G‑20 finance ministers and central bankers set for 17 Oct. in Washington, DC.

In an interview with Agence France-Press news agency, the OECD’s head of tax policy, Pascal Saint-Amans, said a political push was needed to relaunch the discussions.

In June, the 129 members of the OECD/G‑20 Inclusive Framework on Base Erosion and Profit Shifting agreed to devise a new global agreement for taxing multinational enterprises by the end of 2020.

The OECD is pursuing two avenues to target the issue that certain businesses, digital companies in particular, can have significant market share in a country where they do not have a physical presence, and as a result escape corporate taxation there.

“The first concerns how we tax companies that aren’t taxed currently, and how to reallocate tax assessment rights,” Saint-Amans said. “The other involves the creation of a minimum tax on profits.”

Asked how such a minimum global tax on profits would work, the OECD head of tax policy said, “The idea is if a company operates abroad, and this activity is taxed in a country with a rate below the minimum, the country where the firm is based could recover the difference.”

This would work in a similar way to the new category of foreign income, global intangible low-tax income (GILTI), introduced for US multinationals by the 2017 US tax reform. GILTI effectively sets a floor of between 10.5% and 13.125% on the average foreign tax rate paid by US multinationals. It was conceived with the aim of reducing incentives to shift corporate profits to low or no-tax jurisdictions by using intellectual property.

While this framework is based on an average global rate, Saint-Amans said the OECD is working on a country-by-country basis.

“Basically, if a French company earns half its profits in the US, taxed at 25%, and the other half in the Cayman Islands, with zero tax, that gives you an average of 12.5%. If you apply it country by country, you recover taxes on half the Cayman profits,” Saint Amans said.

Some have argued that this would infringe on the fiscal sovereignty of countries.

“Not at all,” Saint-Amans said. “Each state would remain sovereign and would watch what’s going on abroad so they could recover the difference. There wouldn’t be any international agency taking the place of national tax administrations.”

He concedes that getting this in place will not be easy and require a multinational agreement.

“But this was already done in 2015 with the deal on domestic tax base erosion and profit shifting (BEPS). And with the political support given at the G‑7, there’s a good chance things will move forward.”

There are still plenty of outstanding questions, he noted, regarding the tax rate for companies, which activities to tax and how to distribute the proceeds fairly.

“It’s a real negotiation. When European officials say, ‘We want to tax digital companies, even if they pay their taxes in the US’, it’s more or less what Indian officials are telling French, German or other companies. That’s to say: ‘These companies operate on our territory, but not enough of their profits are staying here, so we want the right to tax them.’”

France agrees tax deal with US

Unwilling to wait until an international consensus is found, France earlier this year became the first country to introduce 3% tax on digital businesses. This step drew the ire of US President Donald Trump, who regarded it as deliberate targeting of US tech companies and threatened to retaliate with tariffs on French goods.

At the meeting of G‑7 government leaders in Biarritz, France, last week, French president Emmanuel Macron agreed with President Trump that, from the date the OECD framework is in force, “France will do away with its national tax” and “everything that has already been paid under the French tax system will be reimbursed, as soon as international tax exists on digital services”.

According to the country’s Ministry of Finance, France will reimburse companies the difference between its tax and the future taxation currently under discussion at the OECD. “For example, if this solution comes into force in 2021, France will calculate the amount that Facebook or Google would have paid in 2019 and 2020, and if the result is less than 3% of the turnover required by the French tax, the groups will receive a tax credit,” the ministry told newspaper Le Monde.

Newsletter

Related Articles

TIMES.KY
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×