What can the tax reform under discussion in the OECD bring to public finances

Posted on Jul 19, 2021 6:34 PMUpdated on July 19, 2021, 6:48 PM

Calculators have been running continuously since the announcement of 1he is July, from the 131-country agreement on international tax reform negotiated under the auspices of the Organization for Economic Co-operation and Development (OECD). However, the latter clarified that the exact technical details of the first pillar remain to be determined. Namely, the amount of surplus profits of multinational corporations that generate more than $20 billion in turnover, the taxable rights of which will be distributed differently between the countries in which they conduct business.

The range is quite wide: 20-30% of excess profits will be taken into account, and may be taxed by the countries in which such profits are made. It will also be necessary to specify the terms of the distribution key for these advantages. “Determining the key to the distribution of the remaining profits will undoubtedly be the subject of intense negotiations. Developing countries have less interest in being dependent on the weight in global GDP compared to the number of users of digital services or even the number of connections, for example,” predicts Fred Topal, a university professor. In Paris Dauphin and one of the authors of a Technical note from the Council of Economic Analysis (CAE) on this international tax reform.

This note notes that assuming 20% ​​of the surplus profits are reallocated, the amount of remaining cumulative profits would amount to about $130 billion. “Assuming that the reallocation of surplus profits will depend on the weight of global GDP, France could recover €840 million in tax revenue,” he explains. This amount could be up to 1.26 billion euros by reallocating rights that will be taxed on 30% of excess profits. For its part, the United States will recover between $5.2 and $7.8 billion in tax revenue, according to its calculations. The reality may be mediocre because French Finance Minister Bruno Le Maire is in favor of 25% to the satisfaction of Washington.

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over tax java

Thus, the amounts of tax revenue that Percy recovered could be higher than the 3% Gafa tax on the volume of sales of digital giants, adopted by France. But at the Ministry of Finance, we are being cautious in noting that with this over-profit reform we expect the same amount of tax revenue as with the Gafa tax. In 2019, the latter raised 350 million euros thanks to taxes imposed on forty companies. In 2020, a figure of more than 400 million euros must be announced at the beginning of the academic year.

Moreover, Gafa will not be the only companies involved, far from it: if the first pillar of OECD reform can, according to economists’ calculations, bring in more revenue, it is due to the fact that more companies will be subject to this new rule . Unique sets Tubal 95. It’s a little more than the number someone else gave Study by Michael Devereux and Martin Semmler of the Oxford University Center for Business Taxضر .

Most likely United States

For the latter, only 78 multinationals will be affected by this first pillar. As a result, the total surplus profits that would be reallocated rights to be taxed would be only $87 billion, assuming 20% ​​of the surplus profits would be reallocated. Of this total, 64% ($56 billion) will be generated by US multinationals. Apple, Intel, Facebook, Microsoft and Alphabet will be affected to the tune of $28 billion, less than a third of the total.

Less than 10% of surplus profits come from Chinese companies. The United Kingdom is in third place with 3.8%, while France, Germany and Japan together account for less than 2.5%.

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