The G7 Finance Ministers finish today a ‘summit’ from which it seems that an agreement in principle is going to emerge to impose a unified Corporation Tax on the profits of a series of multinationals
Has the end of tax avoidance come? Has the practice of large multinational companies of extracting their income from one country to another ended, until they end up declaring them in a tax haven where they do not pay taxes? Legal heroics such as the ‘Irish double’ and the ‘Dutch sandwich’, with which a company creates a subsidiary in Ireland that passes through Holland but then returns to Ireland creating a company under Bermuda law. Will they go down in history? ?
If you are self-employed, your blood pressure has probably risen by reading the previous paragraph. Maybe out of anger. And maybe out of hope. Of course, you are always going to pay more taxes than a multinational. That, be very clear. But, as of today, the foundations may begin to be laid so that the disparities, although great, are not insulting. Large companies evade up to 40% of their taxes outside their countries of origin, which, according to the OECD, that the international body that will have to deal with the thorny part of the details of the commitment, would be equivalent to 165,000 million annual euros. The IMF , for its part, raises the figure to almost 500,000 million.
This means that, thanks to these clever tax techniques, States collect between 8% and 25% less than they should in Corporation Tax. Which, in turn, means public revenue of between one and four points of GDP. In an age of unimaginable deficits and debt, governments are likely to want to take their hands on these companies. And, in particular, that of the United States. Donald Trump had gone round to this measure, but his successor, Joe Biden , wants this tax to obtain resources with which to finance part of his infrastructure and expansion plans of the Welfare State. It is, moreover, “a measure that questions the economic model of a series of countries, such as Panama, Bermuda, or the Cayman Islands,” eplicaJosé Luis Escario , expert in tax avoidance and associate researcher at the Carolina Foundation and associate professor at the International University of La Rioja.
But general principles are one thing. Another, the details. And that’s where the problem lies. The G7 finance ministers finish today a ‘summit’ in London from which it seems that an agreement in principle is going to emerge to impose a unified 15% corporate tax on the profits of a series of multinationals that, on the one hand, have a turnover of more than 20,000 million dollars (16,400 million euros) and, on the other hand, meet a series of requirements regarding the internationalization of their operations. That is what brings the total number of affected firms to just one hundred, according to estimates by the Financial Times newspaper .
That would mean that the Treasuries of the whole world enter 120,500 million euros annually, according to estimates of the think tank Tax Observatory , financed by the European Union. Of that amount, 40.7 billion would go to the United States, and 48.700 to the EU. Spain, however, is one of the countries that would collect the least : just 700 million euros per year.
Even reaching that minimum agreement has been complicated, because each country has pulled towards its side. The EU wanted to record only large technology companies that, with the excuse that they do not have a physical base in many countries, do not pay taxes on what they invoice in them. The United States – and also China, which is not in the G7, but is in the G20, to which the negotiations are now passing – as technological powers that they are, they refused outright, because, in that case, their companies would be the to pay the new tax. In the end, the result is a compromise agreement.
And there are still more fringes. The most obvious: where the benefits are recorded. Is it where the corporate headquarters are or where the consumers are? To this is added a more arcane question: how do you distinguish ‘routine’ benefits, which come from the normal activities of a company, from ‘residuals’, which tend to be linked to intangibles, such as marketing or the bases of data, which in the age of the online economy have a growing importance?
All those questions remain for the next six months. And, then, comes the application of the agreement by all the countries of the world. “The implementation is complicated, but the bank secrecy has already been done and the same thing happened. The EU was the first to talk about the automatic exchange of information to end bank secrecy. It did not go anywhere, and suddenly The US removes the FATCA [a law that obliges banks to provide the Treasury of that country with data on the assets of their clients abroad], and this is derived from global OECD standards “. Thus, little by little, large companies will also pay taxes. Of course, not as many as a freelancer.