A major advance or a too timid text? The agreement on the taxation of multinationals signed by 136 countries on Friday, October 8, allows the establishment of a 15% tax on the profits of these companies. An outcome after nearly “four years of intense negotiations”, insisted Bruno Le Maire. Among the signatories are the United States, China, India and the states of the European Union.
But this historic agreement is already the subject of several criticisms. Franceinfo explains why.
Because it’s “a bargain deal”, according to Oxfam
One of Criticism leveled by NGOs, including Oxfam, of this tax is that its rate is well below that recommended by the High Level Group on International Financial Accountability, Transparency and Integrity (FACTI Panel). This assembly of experts, made up of former heads of state and government, central bank governors, business leaders, civil society figures and researchers, called for an inclusive rate “between 20 and 30%”, as reported by the NGO Oxfam in a statement. Likewise, the ICRICT Committee of Experts, which aims to fight against social inequalities, composed in particular of the Nobel laureate in economics Joseph Stiglitz and Thomas Piketty, recommended a rate of 25%.
Finally, the agreement presented Saturday October 8 ruled for a rate of “15%” instead of a rate “at least 15%”. “Under pressure from tax havens like Ireland, the OECD gives birth to a discount deal for countries like France”, says Quentin Parrinello, spokesperson forOxfam France, contacted by franceinfo. A key concession including the Irish Minister of Finance, Paschal Donohoe, its touted in a statement (in English), in stressing that this nuance allows Dublin to protect itself from the threat of future increases in this minimum threshold.
Ireland has so far offered companies present in its territory, including many multinationals including Google and Apple, a tax rate of 12.5%, one of the weakest in the European Union.
For Quentin Parrinello, Ireland’s tax rate, which will therefore drop from 12.5 to 15%, is done “in exchange for strong rewards and a lot of exemptions, especially over the next ten years. This is what will allow multinationals to lower their tax rate below 15%., he explains. We absolutely wanted to have Ireland [dans cet accord], but we lowered the general level. “
Because developing countries are wronged
According to OECD estimates, the 136 signatory countries of the agreement, which represent 90% of world GDP, will be able to generate around 150 billion euros in additional revenue thanks to this minimum tax. An amount colossal. But developing countries are not going to benefit much, assures Oxfam.
Indeed, according to the agreement, a company must achieve at least one million euros of turnover in a state for the latter to benefit from the measure, or 250,000 euros if the state’s GDP is less than 40 billion euros. Now the the majority of multinationals’ revenues are recorded in the countries of the North.
“The United States and Europe will mainly benefit from it”, told AFP Daniel Bunn, head of international projects at the Tax Foundation, in Washington (United States). Because multinationals “house their head offices and most of their customers there”. According to Oxfam, the poorest countries will recover less of 3% additional tax revenue. The NGO denounced “a simulacrum” and an “capitulation” vis-à-vis countries with the lowest tax rates.
Oxfam ensures that “theDeveloping countries are more dependent on tax revenues from multinationals “. In 2018, 19% of tax revenues in African countries came from corporate taxation, compared to just 10% for OECD countries.
Because this reform has yet to be approved by the US administration
Although the multinationals concerned have approved the announcement of this agreement, it has yet to be validated by the US administration. An important step in the process, because at the end of June, the United States asked several European countries to delay the proposed tax on digital giants as part of a discreet diplomatic approach. “There is nothing directed against the Americans and I wish we could allay American concerns about it”, assured Bruno Le Maire in June.
US Secretary of the Treasury Janet Yellen, said the floor set by the global minimum tax was a victory for the United States and for the country’s ability to raise funds from businesses. “Americans will find a much easier place in the global economy to find a job, earn a living or grow a business.”, welcomed Janet Yellen.
Today’s agreement represents an once-in-a-generation accomplishment for economic diplomacy. We’ve turned tireless negotiations into decades of increased prosperity – for both America and the world.
My statement on the OECD Inclusive Framework Announcement: pic.twitter.com/nRUbRP4BrD
– Secretary Janet Yellen (@SecYellen) October 8, 2021
She urged Congress to pass the international tax proposals quickly. As reported the Wall Street Journal (article in English), many analysts assure that this would require a treaty, which will have to obtain the favorable vote of two thirds of the elected representatives in the Senate, which would require the Biden government to obtain the support of a part of the elected Republican ones. Which could take some time.