Paul L. Caron

Tuesday, February 4, 2020

Trump’s Tariff Threats Are Spurring Global Tax Reform

Following up on Sunday's post, OECD: International Community Renews Commitment To BEPS To Address The Tax Challenges Of Digitalization:  Wall Street Journal, How Trump’s Tariff Threats Are Hustling Global Tax Reform:

Global tax reform has taken a small step forward—but only by delaying tough conversations. Another wave of political brinkmanship over the thorny question of how Silicon Valley’s technology giants are taxed is all too possible.

On Friday, the Organization for Economic Cooperation and Development announced a deal to move ahead with a single framework for reallocating corporate taxation rights—there were previously three rival proposals—and plans for a minimum tax. Officials from 137 nations now aim to agree on an approach by July and a solution by December.

The timing is very ambitious and there are still a number of “critical differences” to be worked out. President Trump’s threats of a trans-Atlantic trade war loom large. Politicians around the world will need to make difficult compromises if the project is to succeed. ...

The political tussle started because many countries, particularly in Europe, lost patience with what they see as multinational companies shifting international profits to avoid tax. Technology companies are a particular focus because they can provide services and earn revenue in countries where they have few physical assets. The likes of Apple, Alphabet and Facebook have booked a tax rate of less than 10% on their overseas profits.

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