First of all: the top twenty industrialized countries could earn the equivalent of about an additional 26 billion euros each year – and that’s just from the five big tech companies – Google, Apple, Facebook, Amazon and Microsoft. The NGO comes up to these numbers Action Aid. ″ The system has stopped working. We need a global tax reform, says Anders Dahlbeck, the organization’s tax expert, which is funded by individual donations and money from governments and foundations.
The NGO study comes at a time when the European Union has once again pulled the short straw against the dominant companies from the United States. An EU court overturned an order from the European Commission last week. This should obligate Amazon to pay taxes in Luxembourg. “We will carefully examine the ruling and look at possible further steps,” said European competition commissioner Margaret Westager shortly after the ruling. A lawsuit against Apple for tax evasion in Ireland has also ended in a similar fashion. Here, too, the European Union has been defeated. The operation is currently being carried out at the highest level – before the European Court of Justice.
Billions through tax scams
When it comes to taxes, one can also talk about billions failing. Most recently, Amazon took 56 million euros in taxes on its European business at its parent company in Luxembourg, although the pandemic allowed the group’s sales to grow by more than a third to 42 billion euros. Tax authorities in the European Union came empty-handed.
How could it be? Skilled tax experts transfer profits, move headquarters and reinvest the profits directly, so that in the end, nothing is left for the tax coffers. They use terms like “Double Irish” or “Dutch Sandwich”. Sven Geogold, a member of the European Parliament for the Green Party, has repeatedly emphasized that Germany is losing a quarter of its corporate tax income to tax havens.
The tax potential untouched by the digital economy is huge, says ActionAid’s Anders Dahlbeck. Not only in industrialized countries – governments can also generate huge additional income in emerging and developing countries. Dalbeck: Additional funds are needed at the moment, when the pandemic has increased the financial needs of governments in the health sector. This may be one of the reasons ActionAid counted it in its report Job recovery Strikingly, it indicates that the potential additional tax revenue for the double vaccination dose could be enough for everyone in the world.
Especially popular with large corporations: tax havens in the Caribbean
The global tax should fix that
But NGOs’ demands go further: ActionAid proposes a global corporate tax of 25 percent. With this, too, it is in line with the zeitgeist: US President Joe Biden only turned to the European Union in April and took a step toward a shift in international tax policy: “End the race for undermining around the world,” the title of a paper from the Treasury The United States proposes a global minimum tax rate of 21 percent. Previously, US Treasury Secretary Janet Yellen also spoke in favor of a minimum tax rate. The finance ministers of Germany and France agreed.
Wants a minimum global corporate tax floor – Joe Biden
At the end of the day, the number provides information about what the companies will have to pay in total. So if you pay less than the minimum tax in a country, you have to pay the difference in your country. With a five percent tax on a Caribbean island, another 20 percent is due in the headquarters country. Reducing profits in high-tax countries and shifting them to where taxes are low, then they no longer work. Of course you need a critical mass for this. Especially the USA, Canada and the European Union countries, and we hope some large Asian countries will participate. “This is where the headquarters of the big corporations are,” Dalbeck said in an interview with DW.
For decades, corporate tax rates have actually known only one direction: going down. Due to international competition, the average corporate profit tax rate is just over 20 percent. In the 1980s they were still 40%. This is why ActionAid is also appealing to at least 25 percent, as many countries will have to adjust the downward trend if the tax rate is higher.
New arithmetic formulas are essential
The world needs money. Around the world, the epidemic and recession have emptied state coffers – especially in developing and emerging countries. “The way tax systems look today, it’s very difficult to get taxes for these countries at all,” says Dalibeck. That is why we are calling on countries outside the North of the Globe to consider other measures to collect taxes.
Some African countries like Nigeria, Kenya or Sierra Leone already deduct a predetermined tax rate from sales of certain offers from big tech companies – for example live broadcasting, social media, or the like. According to the OECD, so-called digital service taxes are already assessed in 40 countries around the world. India, for example, has introduced thresholds: users and revenue generated in India. If these are higher than certain values, then taxes are due. So tax scams should take on less importance.
Few people around the world are still receiving vaccination – especially in developing and emerging countries, there is a shortage of funds for intensive vaccination campaigns.
ActionAid advocates in its report for a global tax system that also respects the needs of developing and emerging countries – ideally under the umbrella of the United Nations. “Countries in which economic activity takes place have the right to collect taxes,” says Dalbeck. But the organization is realistic: in the near future it is unlikely that such a complex set of rules will exist.
Currently, a global minimum tax rate and national individual effort will be established. The time for such a move appears to be a good time indeed. Because the United States of America and the European Union also want the winners of the epidemic to share in the costs of the crisis. The global tax minimum may come early in the summer. You can almost be sure: Tax experts from Amazon, Google, and Co are already working to fine-tune these requirements away.