Complete News World

Germany as a winner - Economy

Germany as a winner – Economy

This means that the G7 Agreement on Global Minimum Taxes / Le Maire: “It will be a tough battle.”

(DPA/AFP). According to Marcel Fratzcher, Germany could be one of the biggest winners in imposing a global minimum corporate tax. “It will inject several billion euros of additional tax revenue into the treasury,” said the head of the German Institute for Economic Research (DIW) at Augsburger Allgemeine. On Saturday, G7 finance ministers agreed on a minimum tax rate of 15 percent. French Finance Minister Bruno Le Maire fears that implementing the plan will be a “difficult struggle”.

Writing to the family via Whatsapp or scrolling through the Instagram feed on the tram – for many people, this is part of everyday life. As a result, Facebook, to which the networks belong, is making money in almost every country in the world through data and advertising. However, most states do not get anything from this money. Because until now, large digital companies only pay corporate taxes if they are based. That should change with the minimum taxes applied globally.

The goal is for large international companies to have to pay at least 15% tax everywhere. Many industrialized countries already have a higher tax rate (graph). But companies choose their headquarters strategically: Facebook is headquartered in Europe in Dublin, for example, and Ireland only charges 12.5% ​​corporate tax. The reform states that in the future companies will be taxed not only on their headquarters, but also where they earn money. This applies to companies with a profit margin of more than ten percent. Profits above this margin are taxed at 20 per cent in the respective countries. This affects the internet giants, but also large companies in other industries, such as pharmaceutical companies.

“Today, the seven most important industrialized countries have supported the concept of minimum corporate taxes,” said Federal Finance Minister Olaf Schultz (SPD). “This is very good news for tax justice and solidarity, and bad news for tax havens around the world.” In addition to Germany and Great Britain, France, the USA, Italy, Japan and Canada belong to the Group of Seven Leading Democratic Economic Powers (G7).

Oxfam criticizes 15% as too low

In the past few years there have been several failed attempts. Schulz now spoke of a “tax revolution.” The euphoria over convention isn’t great all over. “It is absurd for the G7 to claim to reform a crippled global tax system by imposing minimum taxes around the world similar to low tax rates in tax havens such as Ireland, Switzerland and Singapore,” said Oxfam’s executive director. Dooley, Gabriella Books. Alice Cobham, president of the International Tax Justice Network, which campaigns for tax justice, believes the plans are unfair. Only rich countries will benefit. “By settling for a tax rate of less than 25 percent, the G7 countries are telling their citizens and the world that they are ready to keep the race alive,” Cobham said.

The agreement is seen as a milestone for reform, but hurdles remain. The next step is to persuade the Group of 20 most important industrialized and emerging nations. Le Maire said on Sunday that at the meeting of G20 finance ministers in Venice in July, “other great powers, especially Asian,” should be involved. He is particularly concerned about China. “Let’s face it, it’s going to be a tough fight.” However, he is confident that the implementation will succeed.

“It is by no means certain that the agreement will also continue with the G20 and how tax rights will be divided against US companies such as Amazon or Google,” said the vice president of the left-wing parliamentary group, Fabio. De Massey. The 15 percent is a compromise. The new US administration had proposed 21 percent and then backed off. At this low threshold, there is hope that the opponents’ resistance will not hold. In any case, the companies didn’t bother with the 15 percent: Google and Amazon were even positive and a Facebook spokesperson welcomed the plan on Twitter, even if the group will soon have to pay more taxes as a result.