Elizabeth Bradley, global head of tax for the law firm Bryan Cave Leighton Paisner, offered comments on the recent G7 agreement on a minimum global tax rate for corporations.
"After years of debate, a proposal to establish a minimum global tax rate for corporations has taken a big step forward, as finance ministers for the G7 adopted an agreement to propose a 15 percent rate," Bradley wrote. "But this is only the first rung in getting these rules adopted. And the next steps may be particularly challenging.
"Although the G7 are to be commended in reaching a historic agreement redefining the rules of international taxation, there is still some detail to iron out. The United States had originally wanted to tax the world’s 100 largest multinationals through Pillar One [a blueprint for taxation in the digital age], by reallocating taxing rights to jurisdictions where a multinational does business, but the announcements at the weekend have dropped references to 100. Will more end up within scope?
"Who are they and to what extent will the tech giants remain within scope, given that the tradeoff for the UK and others will be to repeal their digital services taxes?
"No doubt, the UK and others will need to be confident that Pillar One passes into legislation in the United States, and overcomes reported opposition. ... Indications are that the UK will not remove its digital services tax until Pillar One is in place.
"It seems clear that Pillar One is no longer focused on digital service providers and consumer facing business and could potentially catch any industry. However, it is aimed only at the most profitable global firms with at least a 10 percent profit margin. Much number crunching will be done in the headquarters of multinationals to determine who may be caught once we know more about the thresholds for participation in Pillar One."
If a 15 percent minimum global tax rate for corporations comes to pass, how might it affect your business and the payments industry overall? Sound off at firstname.lastname@example.org.
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