Bold tax initiative is simply “the start of an extended and troublesome highway”: Analysts

Rome, July 12 (Xinhua)-When the finance minister of the world’s largest economy agrees to demand the lowest global corporate tax, it is welcomed as a big victory in efforts to make it difficult for large corporations to fend off taxes. it was done. But analysts said it was just the “beginning of a long and difficult road” and that the most difficult part of the process had not yet come.

After a two-day meeting in Venice, the G20 Finance and Economy Ministers of 20 countries have agreed to begin work on Saturday to adopt a global corporate tax rate of at least 15% for multinational corporations. did. A more stable and fairer international taxation system. The agreement came a few days after the Organization for Economic Co-operation and Development (OECD) adopted a similar objective.

According to Francesco Daveli, a professor of macroeconomics at SDA Bocconi School of Business, the agreement has set a new level of coordination between countries related to one of the difficult global tax issues facing the government. There was “potentially very important”. .. However, Mr. Daveli also said that the validity of the agreement depends on how the details of the agreement are filled out over the coming weeks, months and years.

“Now we know how our leaders want the end result, but the details haven’t been negotiated yet,” Daveli told Xinhua.

Daveli said the next step would be to complete the wording of the proposal and make it available to G20 leaders scheduled to meet in Venice in October. After that, countries, including the most important players such as China, the European Union and the United States, need to come up with a harmonious set of standards. Much of that work is likely to be done within the OECD, and its membership overlaps significantly with the G20 countries.

Umberto Triulzi, a professor of political economy at Sapienza University of Rome, said the final agreement is unlikely to be announced by 2023 or 2024.

“This kind of agreement is very complex and detailed,” Triulzi told Xinhua. “The agreement in Venice is important, but it is the beginning of a very long and difficult road.”

Triulzi said the difficulty of the agreement is demonstrated by the fact that there is no widespread harmonization of tax law, even among the 27 member states of the European Union.

The general goal of this plan is to discourage the practice of multinational corporations using accounting schemes to record profits and generate minimum tax amounts. Doing so can distort competition and rob the state treasury in tax jurisdictions with higher tax revenues, economists say.

Triulzi said the initiative would prevent “financial shopping” in which some countries create incentives to lower tax rates in order to convince large companies to do business in their own countries.

Ambitious tax initiative is only “the beginning of a long and difficult road”: Analysts

Source link Ambitious tax initiative is only “the beginning of a long and difficult road”: Analysts

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