Brussels (Brussels Morning) This week, members of the Organisation for Economic Co-operation and Development (OECD) members are to decide on the proposed global minimum corporate tax of 15%.
The G7 approved the concept earlier this month, stressing the need to stop a “race to the bottom” among countries competing for investors with offers of lower taxes, RFI reported on Sunday.
The proposed global tax is part of a series of reforms aimed at helping countries to collect their share of taxes from global tech giants wherever they are based.
Talks between 139 OECD members are due to start on Wednesday and to last two days. Thereafter, the G20 will discuss the proposal when finance ministers meet on 9 and 10 July in Italy.
Pascal Saint-Amans, head of OECD’s Centre for Tax Policy and Administration, said earlier this month that he didn’t think “we have ever been so close to an agreement”.
A failure to reach agreement would result in unilateral taxes and retaliatory US measures, he predicted, noting that “everybody has realised that a deal is better than no deal”.
Disagreements in EU
EU member states have mixed views about the plan. Ireland and Hungary have set corporate tax rates below 15%. Ireland attracted US tech giants Apple, Google and Facebook with its corporate tax rate of 12.5%.
According to two sources involved in the talks, China supports a global tax of 15% or lower. US Secretary of the Treasury Janet Yellen has pointed out that China has concerns about the plan.
The UK has supported the G7 plan, but wants its financial sector to be exempt from taxation of profits of companies that are based overseas.
France warned that the US Amazon online retailer could dodge the tax because its profit margin is below the 10% threshold.
Proposed rules would target the 100 largest multinational companies, but G24 countries want to add more to the list.