Topic: Never seen before OCDE pact for 15% minimum global corporate tax - page 2. (Read 318 times)

But what they are paying for the particular job is sad. The reason why these big companies are even investing in such Nations are because they are providing them with added benefits of cheap labor and instead of providing them benefits they seem to get on this corrupt train.

These companies can afford to pay the workers well, but they choose not to. Make them work twice as hard. But then again they are far better than anything else since during pandemic there are worse things to consider.

(( Remember what Kylie Jenner did , this was just an example how they treat them ))

First of all, OECD was an arrangement where issues relating to tax evasions are discussed. As mentioned above by me 15% tax rate is for double tax avoidance only. These companies also have created a law relating to Notified Jurisdictional Area(NJA), in this business which interact with companies in these areas like Panama are heavily taxed, basically, the amount of tax which would have been paid by companies in NJA is recovered from business in their own countries.

Secondly, I don't sometimes understand bitcoiners, on one hand, they want that bitcoin should not be taxed and therefore they would pay the least taxes to the government but on the other hand, they want Companies operating globally to pay the highest tax possible. Strange dubious behavior.

I believe that 15% is not even enough, that is just way too little. If a company still wants to handle their business in a shadowy nation, hide their wealth in panama or whatever then you have to punish them in an amount that has never seen before. Make it like 10 billion dollars for each nation they work in.

Just to give an example, lets say facebook is doing something shady and people like mark hiding their money in panama, in that assumption facebook is all over the world right? Make it 10 billion dollars for each nation they work with and it becomes nearly 150-200 billion dollars, in that case they will of course fail to pay that and it will be insanely hard to overcome that problem and continue to exist, they can still find a way but I can guarantee you that they will play nice after that and all the other nations will be afraid. The problem with big companies hiding their wealth is that no government does anything about it, give them something to fear and they will follow the rules like everyone else.

Kindly change the subject. It is OECD and not OCDE, which I believe you are aware too as you have written on OECD below.

The new radical changes that you are talking about forms part of new edition of Base Erosion and Profit Shifting (BEPS) which is known as BEPS 2.0. This includes the 2 pillars as below:
Pillar 1: Revising the nexus rules and profit allocation rules - This is mainly meant for revising the nexus of where digital services are consumed. Because determining the nexus of digital goods and services is what causes the highest confusion.

Pillar 2: Setting up of the new global minimum tax rules - Here the nexus in market jurisdictions should arise in which case the income would be taxable in the market jurisdiction. Here there is a distinction between countries that are developed countries(GDP more than 40B Euro) where the corporation should have at least 1M Euro in revenue and the same threshold is 250,000 Euro in underdeveloped countries.

Further, in your example, there is a bit of confusion: Just because an Irish corporation buys Iphones it will not be taxed in Ireland. The taxing rights stay with the country where the sale actually happened i.e. where the transfer of the risk/ownership of the goods actually took place. Of course the MNEs would structure the deal in such a way that it seems that the sale took place in a low tax jurisdiction. But Tax treaties provide that if the intention of the transaction was only to avoid taxes, then corporations can be taxed in the other state (the one selling goods) as well. But it is inaction of the government/tax offices to actually chase these corporations that is the issue.

Also the new minimum tax rules under Pillar 2 is supposed to stop these MNEs from avoiding a lot of taxes and could finally bring parity in taxing of large MNEs and smaller corporations.

These inconsistencies in the economy are opening the opportunity for others in the markets. Taking as an example the iPhone phone that its biggest competitors tend to offer cheaper phones like Xiaomi, Samsung, Huawei among others.

Not everything is bad, despite everything the global economy benefits by opening jobs to meet the demands.

I think you are mistaken in two aspects. One is that the 15% tax rate is basically created for Double tax avoidance agreements. This means when a foreign company operates in a country it will either pay the tax at the rate specified in that country or the rate of DTAA whichever is lower, This is done to avoid the problem of double taxation because the same income used to get doubly taxed in both the source country and the home country, this practice actually made a lot of companies set up their head offices in Off-shore tax-free Islands. This is why OECD decided to give this thing a nod.

Secondly talking about the iPhone thing. Can you please refer to the source of your calculation? Because if you manufacture in India or China you surely pay the VAT or the GST, even if I assume that on exports it can be rebated but in Income tax, there is a section of transfer pricing which means the margins on your products should always be adequate to ensure that you don't transfer profits into a lower tax country. This section can be invoked here for sure.

As George Turner, Executive Director of TaxWatch, puts it, "we're going to see that what's more risky is tax havens like Bermuda, where they can afford not to pay taxes".
the global corporate tax consensus no longer sees a tax haven, as the G7 has suggested that the 15% tax levied on every major corporation will not change their base under global consensus.

while José Castaneda has high hopes for every major country to continue to encourage and provide full support for this international tax rule. thus making a kind of balanced agreement between the tax application system regulations.

and if the deal is not done, then many companies are quite worried, where they get a discount of 10 to 30%.

as head of aviation finance at KPMG Joe O'Mara continues to ensure that industries such as aircraft leasing will remain on the defensive without evading taxes every year.

First, there was no pact, Ireland didn't agree to it, so the rest can get that 15% and stick it where it belongs.
Second it not about every country having the same tax as Ireland but more on Ireland raising its tax to other countries levels.


Why should any tax be paid in the manufacturing country?
You made a product worth 25$, here is 25$, goodbye!
I bought something worth 25$, it's my business to whom I sell it and how much and where this happens, my money my product!
If I sell you my car and I make 2000$ on top of what I bought it a year ago should I pay 10% to the German government because it was manufactured there?

On every country having the same tax as Ireland, that is kind of what happened with the pact. Except that some countries won´t accept it, thus leaving room open.

On the manufacturing on poor or rich countries, that is unrelated to tax, as the price of the iPhone is unrelated to its real production cost. I am not saying that it should be manufactured in one place or another at all. The example is how the tax that should be paid in the manufacturing country and then in the destination country gets avoided by stating most of the profit as made in a third country that does nothing but has low tax.

I have a far better solution. Why not change the tax in all countries to that of Ireland?
Doesn't it make far more sense, companies would not have to go through all this, you won't have a lot of guys chasing them down and products would be much cheaper for everyone ? Of course, the governments would have to cut their spending and they will not have that much leverage when trying to bribe voters with claims that they are fighting the evil corporations and they are spending all their blood on these battles, but I could live with that.

Taxes, taxes and taxes...
All those governments have one single plan, tax the hell out of everything and try to hand as many freebies as they can to buy some votes, it doesn't matter than long term you're ruining your economy, it matters that you get the 51% necessary so you're set for 4 years.


You're looking at it from the wrong point of view.
If there would be no rich countries to pay 250$ for that phone the poor manufacturing countries would be out of a job!
Try to sell that for 200$ right from the factory and let's see what happens, in one month the factory is in another country.

As you mentioned, I think the biggest problem with this agreement is to exacerbate the imbalance between developed and developing countries.

As you mentioned, the iPhone is manufactured in China or India, and the cost is only $25, and the tax to be paid is 0.3 cents. The Irish company bought the iPhone and paid $1 in taxes. In the end, the iPhone was sold in Germany at a tax rate of approximately $20.

Obviously, the developed countries get more profits, while the manufacturing-based developing countries can only get a small return. I think it will also accentuate the inequalities between rich and poor countries. And 60% of the minimum tax revenue will be reaped by G7 countries. Developing countries, which represent more than a third of the world's population, are expected to receive only 3% of the revenue. (Quote from Parrinello）

Does 15% sound like too much. Certainly not, most countries, even Ireland and perhaps except tax havens, have a higher official tax than 15%. It is a step in the right direction, however:

- The problem is rarely the minimum tax, but rather the private deals of governments with large corporations to lower this to, sometimes, near zero taxes.
- Countries that are less attractive for investments cannot lower their taxes. This equates to having to sell your oranges at 50 cents a pound no matter if they are ripe, large, small, juicy or dry.
- Since not all countries participate, this does not address the problem of corporations setting shadow structures on these.

One of the key points however is the intent of the states to charge tax where goods are consumed. This is obviously aimed at Google, Facebook, Amazon, Netflix and the like, who, until now were declaring the profits where they choose. This would look as simple as this:

- An iPhone is manufactured in China or India. It costs 25 USD.
- This iPhone is sold to a company in a lox tax country. The iPhone is sold for 25 USD and one cent. One cent of profit is taxed in China or India at (e.g.) 30%. They pay .3 cents of taxes.
- An Irish corporation buys the iPhone for 200 USD. This is taxed at the low tax countries profit tax (e.g. 1%, so they pay 2 USD there)
- The iPhone is now in the European Union, it travels freely to Germany where it is sold at 210 USD. This profit is taxed in Ireland at 10% (thanks to an special agreement). That is 1 USD of tax.
- VAT is applied at 20%, that is around 40 USD. That´s paid in Germany.

Apart from VAT, The real tax at that 15% minimum if you do not do all this tax avoidance is (210 - 20) *15%, plus VAT.

Excluding VAT, the tax should have been 28.5 USD and they have managed to pay 3.3 USD. This is a very basic example and figures are probably far from accurate, but you get the idea. A solution has to address this pick and choose of where to pay.