Bold tax initiatives are solely “the start of a protracted and troublesome street”: analysts

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Illinois News Today

Rome, July 12th (Xinhuanet) – If the finance minister of the world’s largest economy agrees to demand the lowest global corporate tax rate, it will be welcomed as a major victory in efforts to make it harder for large corporations to fight taxes. it was done. However, analysts said this was just the “beginning of a long and difficult road” and that the hardest part of the process had not yet come.

After a two-day meeting in Venice, the G20 finance and economy ministers from 20 countries agreed to start work on Saturday to adopt a global corporate tax rate of at least 15% for multinational corporations. did. A more stable and fairer international tax system. The deal came a few days after the Organization for Economic Co-operation and Development (OECD) adopted a similar goal.

According to Francesco Daveli, professor of macroeconomics at SDA Bocconi School of Business, the agreement has set a new level of coordination between countries on one of the difficult global tax issues facing the government. It is “potentially very important”. .. However, Mr Daveli also said that the validity of the agreement depends on how the details of the agreement are filled out in the coming weeks, months and years.

“Now we know how our leaders want the bottom line, but the details have not yet been negotiated,” Daveli told Xinhua.

Daveli said the next step would be to complete the text of the proposal and make it available to the G20 leaders who will meet in Venice in October. According to this, the countries, including the most important players such as China, the European Union and the United States, must draw up a harmonious set of rules. Much of this work is likely to be done within the OECD, and its membership overlaps significantly with the G20.

Umberto Triulzi, professor of political economy at Sapienza University in Rome, said the final deal is unlikely to be announced before 2023 or 2024.

“This type of agreement is very complex and detailed,” Triulzi told Xinhua. “The Venice agreement is important, but it is the beginning of a very long and difficult journey.”

Triulzi said the difficulty of the agreement was demonstrated by the fact that there was no far-reaching harmonization of tax law even among the 27 member states of the European Union.

The general aim of this plan is to discourage the practice of multinational corporations using bookkeeping schemes to record profits and obtain minimum tax amounts. This can distort competition and rob the treasury in tax jurisdictions with higher tax revenues, say economists.

Triulzi said the initiative would prevent “financial shopping,” where some countries incentivize lower tax rates in order to convince large companies to do business in their own countries.

Ambitious tax initiatives are only “the beginning of a long and difficult road”: analysts

Source link An ambitious tax initiative is only “the beginning of a long and difficult road”: analysts