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Archives: June 2021Subscribe
By Hamza Ali and Jan Stojaspal
The Czech government will continue efforts to implement a digital services tax on tech companies until a global deal to overhaul the tax system being discussed by OECD nations is put in place. “On behalf of the Ministry of Finance, the Czech Republic is currently ready to introduce a digital tax rate of 5% at the national level as soon as possible” and to enforce it “until a global solution is adopted and implemented,” a spokesperson for the Czech finance ministry said.
By Leonard Kehnscherper
G-20 finance leaders are set to endorse on July 9-10 a deal setting a global minimum corporate tax, Reuters reports, citing a draft communique. Finance leaders to call for technical work to be completed so they can approve the framework for implementation in October.
By Wojciech Moskwa
Poland is in favor of a global minimum corporate-tax rate as long as it doesn’t impede its ability to lure foreign investors by offering tax relief, Finance Minister Tadeusz Koscinski said. Along with Ireland and Hungary, Poland has been seen as a potential European holdout in the minimum tax plan backed by the G-7 group of the world’s richest countries. Koscinski said Warsaw would support a deal once there’s clarity on carve-outs, or exceptions to where the new regime must be applied. With per-capita economic output at about three-quarters of the European Union average, Poland’s government has prioritized catching up with its western peers in the next decade. It plans to do so in part by continuing to offer special terms, including tax breaks, for companies relocating to the east European nation.
By Joachim Englisch
The G20/OECD Inclusive Framework is currently deliberating an effective international minimum tax as Pillar Two of its work on the tax challenges arising from digitalization. Political agreement on the so-called Global Anti-Base Erosion Proposal (GloBE) is sought for summer 2021 and prospects currently look good, in particular due to its full endorsement by the Biden administration. This paper outlines the developments leading up to the October 2020 Blueprint on GloBE and provides an assessment of its policy rationale and of certain objections raised in public hearings and in literature. Moreover, the paper critically analyses some of GloBE’s key design features; it also shortly addresses its compatibility with tax treaty law and simplification measures.
By Lorraine Eden
This project started with a clue and a hunch. The clue: The OECD’s Economic Impact Assessment (EIA) mentions that its estimates for automated digital services (ADS) use U.S. Bureau of Economic Analysis (BEA) data on the information sector. The hunch: BEA data might provide fine-grained estimates of the impacts of Pillar One Amount A at the country and industry levels for ADS and consumer-facing businesses (CFB). The hunch was correct. To the best of my knowledge, this article is the first to provide public estimates of the impacts of Amount A at the individual country and industry levels, from a single-country perspective. Corporate income tax (CIT) base gains and losses, by country and industry, are provided for both jurisdictions with MOFAs (majority-owned foreign affiliates with U.S. parents) and MOUSAs (U.S. majority-owned affiliates with foreign parents). Estimates using 2018 preliminary BEA data are provided for ADS, four CFB industries (pharma, retail trade, transportation, and wholesale trade), and all industries. The key results are: (1) From the U.S. perspective, Pillar One Amount A is primarily a U.S.-Europe story since MOFAs in Europe and European MOUSAs in the United States dominate foreign affiliate sales and profits for ADS, CFB, and all industries. (2) Europe in its role as host to MOFAs and the United States as host to European MOUSAs would, for most industries, be tax-relieving jurisdictions expected to give up CIT base under Amount A. Comparing the relative sizes of U.S. and European CIT base changes across industries suggests that Europe would lose relative to United States.
By: Stephanie Soong Johnston
Argentina has made strong progress with its legal and regulatory framework for exchange of information on request, but other jurisdictions, like South Africa and Ukraine, need more work, according to the OECD’s tax transparency body.
By: Sarah Paez
The OECD and EU are working on initiatives to curb tax evasion and avoidance through broader exchange of information and tax transparency rules tailored to the rapid digitalization of global financial systems.
By: Sarah Paez
The European Commission will release a proposal for a digital levy-based own resource soon after G-20 finance ministers agree on a two-pillar plan to modernize global corporate tax rules, EU Tax Commissioner Paulo Gentiloni said.
By: Amanda Athanasiou
A carbon price floor for the world’s highest emitters could address countries’ reluctance to unilaterally enhance their climate goals and prevent an inefficient network of border carbon adjustments, according to a new proposal.
By Isabel Gottlieb and William Horobin
Talks in coming weeks between more than 100 governments before a Group of 20 meeting in July will build on the outlines of a deal earlier this month by Group of Seven finance ministers. Despite their breakthroughs on a minimum global corporate tax rate and a shift in philosophy allowing one country to apply levies to profits of another’s national champions, multiple technical details remain unresolved.
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