Will the United States be able to implement the Global Minimum Corporation Tax of 15% on the global stage? International prosecutors show their doubts. Half believe it is “unlikely” to be implemented despite announcements from the G7 and the OECD in recent months.
This is stated in the Economic Consensus for the second quarter of 2021 published by PwC. The contribution of companies to the Common Treasury is the subject of discussion at the national and international level. Respondents defend its simplification and are also in majority in favor of the inspection efforts being focused on large business groups.
At the international level , the opinion is conclusive. 77.7% support the recent OECD pact to establish a minimum rate of 15% in Corporation Tax, although almost half consider it “unlikely”. On the other hand, a large majority advocates the abolition of taxes on Estate and Inheritance.
The specialists show their doubts about the application of the fiscal measures promoted by Washington after the opposition of the small European economies. The G7 decision – signed by Germany, Canada, the United States, France, Italy, Japan and the United Kingdom – has bothered European partners.
The measure is signed by the three major European powers: Germany, France and Italy. However, in Europe and the EU there are modest economies that use a fiscal policy with a lower Corporate Tax to attract investment. This is the case of Ireland or Cyprus – which set a general rate of 12.5% -, Bulgaria – which applies 10% – or Hungary, which maintains the reference rate at 9%.
Ireland and Hungary are currently leading the response to the G7, also against their European partners. Irish Finance Minister Paschal Donohoe has warned that Ireland will defy the G7 decision and “fight” to maintain its 12.5% Corporate Tax rate. Donohoe spoke at the time with Janet Yellen, the United States Secretary of the Treasury. The Irishman told the Biden Administration that “there is still a role for legitimate tax competition, particularly for smaller economies.” Donohoe hopes that other countries will join his request and challenge the G7 decision.
This summer, Donohoe insisted that Ireland will not adhere to global tax reform plans , cementing the country’s resistance to this move that is gaining support around the world. “What is on the table at the moment is an agreement that Ireland cannot be a party to,” he told Irish public broadcaster RTE.
“We are committed to negotiating to see if we can enter into the agreement at some point, but I defend 12.5%,” he added. The Irish minister stressed that “it has been a key feature of our economic policy for decades.”
According to his estimates, Ireland will lose around 2 billion euros a year with the G7 decision. Donohoe anticipated this situation months ago and incorporated this eventuality into the Budgets. Losses to the Irish Treasury, between € 2 billion and € 2.4 billion, will be equal to one fifth of the annual tax revenue from Irish Corporation Tax.
For his part, the Secretary of State for Tax Affairs of Hungary, Norbert Izer , has come to describe the United States proposal as a “violation of sovereignty . ” Hungary has the lowest corporate income tax rate in Europe, 9% , and one of the lowest in the world.
In January 2017, Prime Minister Viktor Orban lowered the country’s rate from 19% to 9% to attract more foreign investment. “It will not accept any solution that makes life difficult for local companies or reduces financial sovereignty,” he said.
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