The finance ministers of major industrial and commercial nations, including Vice-Chancellor Olaf Schultz (SPD), agreed in Venice on plans for a minimum tax of 15 percent to prevent tax evasion and a new distribution of international corporate tax rights between countries. States. The last questions should be clarified by October, when the G20 heads of government agree.
“There is no turning back”
French Finance Minister Bruno Le Maire described the agreement in Venice as the opportunity of the century. “There is no turning back. We are putting an end to the tax race to rock bottom,” he said. US Treasury Secretary Janet Yellen agreed that “the world is ready (…) and there is broad consensus on how to do it: with a global minimum tax of at least 15 percent,” Yellen said. And called for the implementation of the agreement quickly.
The ministers called on countries that have so far rejected the plans to join the agreement. Federal Finance Minister Olaf Scholz (SPD) spoke of a “historic” decision.
The final declaration said the agreement should create a “more stable and equitable international tax architecture”. A breakthrough was achieved in negotiations on a global minimum tax for large corporations on July 1 under the Organization for Economic Co-operation and Development (OECD). The project is currently supported by 132 of the 139 members of the so-called comprehensive framework of the Organization for Economic Co-operation and Development.
“Finally, large corporations can no longer evade their tax liability,” Scholz wrote on Twitter online. Now is the time to implement it so that the tax is effective from 2023.”
Criticism of the union
The parliamentary bloc of the Union in the Bundestag criticized the decision. “Instead of taking a big step toward more tax fairness, we’re seeing just the opposite,” CDU MP Antje Tillman, a fiscal policy spokeswoman for the union’s parliamentary group, said on Saturday. None of the goals of the OECD project to reform the global tax system, which the group has supported from the start, will be achieved with the reform now decided.
Almost all of the 139 OECD countries have agreed to the labor-level reform, including in well-known tax havens. On the other hand, the three EU countries, Ireland, Estonia and Hungary, were among those who refused. An international agreement must be concluded for the new distribution rules. The minimum tax must be implemented individually in the states.
“It is not entirely clear who will keep their word here for the next few years.”
Originally, the idea was to reduce destructive tax competition. Instead, despite the agreement, the 132 countries that have agreed can now choose for themselves whether to impose minimum taxes,” Tillman criticized. “It is not entirely clear who will keep their word here for the next few years. It is not even clear whether the European Union will participate, because three member states are among the seven critics, but we need their approval of an EU-wide introduction. International tax competition on their own.”
The rule is expected to affect less than 10,000 companies worldwide. However, with a minimum tax of 15 percent, the OECD expects more than 126 billion euros in additional tax revenue annually.