That’s money governments could use as
they see deficits rise from spending on
pandemic relief.
THE SOLUTION: THE GLOBAL
M I N I M UM TA X
The talks seek to put a floor under corporate
tax rates by having countries legislate a
minimum that they would levy on untaxed
foreign income. In other words, if Company X
headquartered in Country Y paid no or little tax
on profits in Country Z, Country Y would tax
those profits at home up to the minimum rate.
That would remove the reason for using a
tax haven, or for setting one up. Biden has
proposed a 15% floor for the global talks,
though it could be higher.
ANOTHER PROBLEM: TAXING
‘DIGITAL’ COMPANIES
Another focus is what to do about companies
that make profits in countries where they have
no physical presence. That could be through
digital advertising or online retail. Countries
led by France have started imposing unilateral
“digital” taxes that hit the biggest U.S. tech
companies such as Google, Amazon and
Facebook. The U.S. calls those unfair trade
practices, and has threatened retaliation
through import taxes.
THE SOLUTION: ALLOCATING
TAXING RIGHTS
Biden’s proposal focuses on the 100 biggest
and most profitable multinationals no matter
what kind of business they are in, digital or not.