The world is facing a tax revolution

A move by America to the minimum tax for corporations enthuses the Europeans. Scholz cheers: “Today we can say: We can do it.”

Federal Finance Minister Olaf Scholz (SPD)

BUnfinance Minister Olaf Scholz (SPD) celebrates the American advance on the minimum tax for corporations as a breakthrough in international negotiations. It is now almost certain that there will be a global agreement by the meeting of the G20 finance ministers in Venice in early July. “I am very, very happy. It will happen now. It’s a great day, ”said Scholz on Friday before a meeting of the Eurogroup in Lisbon.

Shortly after taking office, America’s Treasury Secretary Janet Yellen brought a minimum tax of 21 percent into play. After an OECD meeting, the representative from Washington surprisingly announced a new figure of 15 percent. It was explained that the 15 percent is a lower limit, ideally more should be aimed for. “Today we can say: We can do it,” said the German minister. There is now a realistic chance for a “global tax reform”. Without this it would no longer be possible to invest in public infrastructure as well as in education and research. The rate of 15 percent makes an understanding very realistic. “So far, rates of 11 or 12 percent were more in the discussion.”

Under the umbrella of the industrialized countries organization OECD, almost 140 countries have been negotiating for more than two years a new world tax regime that rests on two pillars: The first is about the winners of globalization, including American internet giants such as Google, Amazon, Facebook and Apple . Specifically, the tax revenue should be distributed differently between the countries in which the companies are based and the market countries – unlike in the past, these “multinationals” can do business without always having to be physically present anywhere in the world.

Even if the term digital tax is repeatedly abbreviated in this context, it is not just about the Internet corporations. The Americans would hardly be ready for such a redistribution at their own expense. Now the target is extremely large companies with unusually high returns, which can include public companies with extremely profitable luxury brands.

“Then someone else will hold up his hand in the future”

The second pillar in the new structure is the minimum tax. As the OECD department head Achim Pross recently explained in an interview with the FAZ, it should look like this: “If a company operates in a country where it pays very little taxes, another will hold out its hand in the future.” On the one hand, additional taxation will be introduced . If, for example, a subsidiary is only taxed at 5 percent in a country, this profit is likely to be charged again in the parent company’s country of domicile. “With a minimum tax of 15 percent that would be another 10 percent.” On the other hand, there is a ban on business expenses if the country of domicile does not post additional tax. In that case, payments from subsidiaries to a parent company in such a country of domicile would no longer be taken into account as a tax deduction.

France’s Finance Minister Bruno Le Maire said in Lisbon on Friday that he considered the American proposal a solid basis for a compromise. It is necessary, however, that there is a solution for both pillars of the global corporate taxation under discussion. The fight against the digital corporations is a particular French concern. The Luxembourg head of department, Pierre Gramegna, was also open to the compromise. “If that is the minimum tax rate that all negotiating partners can agree on, it will obviously make life easier for us all,” said Gramegna in Lisbon. In recent years, his country has often been suspected of offering tax loopholes to global corporations.

Shortly before the weekend, the Bundestag passed the law to implement the anti-tax avoidance directive. It contains a package of legally binding measures to combat tax avoidance. He also approved the law to modernize corporate tax law. This gives commercial partnerships and partnership companies the opportunity to make use of the same tax regulations as a stock corporation or GmbH. In other words: the legislature has created a new design option.