Big Tech Companies to Be Hit by 'Historic' International Tax Agreement

[MacRumors]

Some of the world's richest countries have today reached a landmark agreement to close international tax loopholes used by some of the biggest multinational corporations, including big tech companies like Apple, Google, and Amazon (via Reuters).

At the G7 summit in London, representatives of the U.S., UK, France, Germany, Canada, Italy, and Japan reached an agreement on a coordinated effort to support a minimum global corporation tax rate of at least 15 percent and committed to ensure that multinational corporations pay taxes in the countries where their business operates.

"After years of discussion, G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age," said the United Kingdom's Chancellor of the Exchequer, Rishi Sunak.

The joint accord, which is expected to form the foundation of a global pact next month, is aimed to stop what U.S. Treasury Secretary Janet Yellen called "thirty-year race to the bottom on corporate tax rates," where countries have felt compelled to slash tax rates and introduce exemptions to remain appealing to corporate giants.

The deal will put pressure on other countries to follow suit and join the agreement. A meeting of the G20 next month is expected to continue the talks with a wider group of nations, including Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.

Any broader, final agreement could have repercussions for low-tax countries and tax havens, such as Ireland, where Apple is headquartered outside the U.S. Low-tax countries are expected to try to build support for a minimum rate as close as possible to around 12.5 percent or seek exemptions.

American multinationals play a significant role in Ireland's economy, attracted by the country's "BEPS" tools, that protect their non–U.S. profits from the U.S. "worldwide" corporate tax system, and provide an effective Irish tax rate of zero to 2.5 percent. As a result, large multinational companies, particularly in the technology industry, such as Apple, Google, Amazon, and Facebook, are expected to be heavily impacted by the new international tax plans.

The agreed minimum corporation tax rate of 15 percent is still above the level in countries such as Ireland, but below the lowest level in the G7. The 15 percent rate is lower than the 21 percent that was expected ahead of the summit, and some countries, such as France, are arguing that the 15 percent rate should be viewed as a base level for setting a higher, more ambitious rate.

A move toward making companies declare their environmental impact in a standardized way, primarily so that it is clearer to investors, was also agreed upon.

Article Link: Big Tech Companies to Be Hit by 'Historic' International Tax Agreement

 

[Reason077]

About time.

 

[ArPe]

Good, it will work out.

Many companies barely declare much profit anyway. So many run on debt. So many run up expenses and debt so they can evade taxes. Some fake their expenses. Some fake their sales and hire pump and dump teams to manipulate stonks.

So there has to be a higher tax and the money gotta be spent on educating young people not to be crooks, be responsible, invest and grow safely, be sustainable not a greedy pig. Education system in the West especially in US is ranked soooo low compared to even Vietnam. No wonder the society wants to fight and eat each other and chase different scams all day.

 

[Populus]

In my opinion, this doesn’t solve the issue many countries have, losing taxes income because the companies choose to pay taxes on another country.

If many countries, such as France, have that 21% of taxes to big companies, and still many others such as Ireland keep their taxes lower (despite raising them up to that minimum of 15%), big companies will keep billing and paying their taxes on Ireland, and the other remaining countries of the EU won’t see any income from the economical activity of this companies on their countries.

From my point of view, the only fair solution to this issues (at least in Europe) is make the companies pay the taxes on the country they generate the profit, the sells. If a customer of an online service, or an online purchase, is located in Spain, the company (Amazon, Apple, Microsoft) should pay the tax on that country rather than paying them to Ireland.

 

[bgraham]

Great to see. It’s starting to feel like the end of 50 years of failed trickle down economics.

 

[ScottishDuck]

Good.

 

[Stridr69]

All that has happened is that prices WILL be going up. If people think that APPLE(used as an example) is going to take a 15% tax increase and just live with it then think again! How about a 15% increase in their pricing for that shiny new iPhone is more like it. Or like whats happening in the grocery stores it's the same price but less product. Companies work for a profit and they'll always make money. Just the way it is, folks.

 

[scottishwildcat]

All that has happened is that prices WILL be going up.

And that's also fine. The market will support what the market will support.

 

[project_2501]

what do you mean "hit by"

we aren't "hit by" our responsibility to society- the same society that enabled us to develop and continue to work with many safety nets and comfort

 

[Stridr69]

And that's also fine. The market will support what the market will support.

Agreed. Don't have to purchase said product.

 

[project_2501]

All that has happened is that prices WILL be going up. If people think that APPLE(used as an example) is going to take a 15% tax increase and just live with it then think again! How about a 15% increase in their pricing for that shiny new iPhone is more like it. Or like whats happening in the grocery stores it's the same price but less product. Companies work for a profit and they'll always make money. Just the way it is, folks.

it's amazing that things aren't zero-priced.

the price includes our obligations to society

(also this doesn't apply Apple who overcharge massively.. £400 for an SSD?)

 

[Stridr69]

Good, it will work out.

Many companies barely declare much profit anyway. So many run on debt. So many run up expenses and debt so they can evade taxes. Some fake their expenses. Some fake their sales and hire pump and dump teams to manipulate stonks.

So there has to be a higher tax and the money gotta be spent on educating young people not to be crooks, be responsible, invest and grow safely, be sustainable not a greedy pig. Education system in the West especially in US is ranked soooo low compared to even Vietnam. No wonder the society wants to fight and eat each other and chase different scams all day.

Kinda sounds like how Donald Trump works(allegedly).

 

[hagar]

In my opinion, this doesn’t solve the issue many countries have, losing taxes income because the companies choose to pay taxes on another country.

If many countries, such as France, have that 21% of taxes to big companies, and still many others such as Ireland keep their taxes lower (despite raising them up to that minimum of 15%), big companies will keep billing and paying their taxes on Ireland, and the other remaining countries of the EU won’t see any income from the economical activity of this companies on their countries.

From my point of view, the only fair solution to this issues (at least in Europe) is make the companies pay the taxes on the country they generate the profit, the sells. If a customer of an online service, or an online purchase, is located in Spain, the company (Amazon, Apple, Microsoft) should pay the tax on that country rather than paying them to Ireland.

that’s part of the deal: paying taxes where your customers or instead of where your headquarters are. This is especially good news for European countries.

 

[Stridr69]

Hey G7!! How about raising wages 15% too!

 

[Sam Squanch]

Great to see. It’s starting to feel like the end of 50 years of failed trickle down economics.

That's a U.S. thing this tax dodging by big corp is a universal thing. It still isn't fair but it is a step in the right direction to get these freeloaders to start paying and contributing like everyone else.

Now if we can start to get universal laws about online commerce and having to pay tax to the local economy of where the transaction takes place, then things will get even better.

 

[JosephAW]

Certain countries will be exempt. I wonder which ones?

 

[hagar]

Hey G7!! How about raising wages 15% too!

You should ask congres and the GOP who are blocking this.

 

[kalsta]

If people think that APPLE … is going to take a 15% tax increase and just live with it then think again! How about a 15% increase in their pricing for that shiny new iPhone is more like it. Or like whats happening in the grocery stores it's the same price but less product.

You might want to check your assumptions and your maths… 15% tax would only be a 15% “increase” if they currently paid no tax at all. But even if it did increase by 15%, that’s tax on profit, which is only a fraction of the retail price. So a 15% tax increase does not translate to a 15% rise in retail price.

The tax system exists to pay for essentials (roads, hospitals, etc), not to subsidise the price of shiny new toys (iPhones, etc). Let big corporations pay their fair share.

 

[Stridr69]

You might want to check your assumptions and your maths… 15% tax would only be a 15% “increase” if they currently paid no tax at all. But even if it did increase by 15%, that’s tax on profit, which is only a fraction of the retail price. So a 15% tax increase does not translate to a 15% rise in retail price.

The tax system exists to pay for essentials (roads, hospitals, etc), not to subsidise the price of shiny new toys (iPhones, etc). Let big corporations pay their fair share.

I agree with corporations paying their fair share but even 15% on profit is still a cut to the bottom line. Shareholders and their respective board's will figure a way to make up for that loss.

 

[macintoshmac]

About time indeed, but they could do with lifting the living standards of people first. This is good, but again, this should not have been a priority. Priority should have been to ensure that people have a minimum standard of living, a job.

 

[kalsta]

I agree with corporations paying their fair share but even 15% on profit is still a cut to the bottom line. Shareholders and their respective board's will figure a way to make up for that loss.

Yes, maybe so. Then again, Apple makes far more profit than it really needs to… Just look at their mountain of cash. Who knows what other factors go into their pricing strategy. I guess if we’re willing to pay it, they’re happy charge it! 😄

 

[Stridr69]

Yes, maybe so. Then again, Apple makes far more profit than it really needs to… Just look at their mountain of cash. Who knows what other factors go into their pricing strategy. I guess if we’re willing to pay it, they’re happy charge it! 😄

That's why we call it the "Apple Tax"

 

[Falhófnir]

At the G7 summit in London, representatives of the U.S., UK, France, Germany, Canada, Italy, and Japan reached an agreement on a coordinated effort to support a minimum global corporation tax rate of at least 15 percent and committed to ensure that multinational corporations pay taxes in the countries where their business operates.

This seems a good step toward fixing dysfunctional global taxation, but for the record, the summit is being held in St Ives in Cornwall, that’s about 300 miles southwest of, and therefore most definitely not in, London!

 

[scaramoosh]

Remember when Brexit meant making our own laws? Not really, we're part of the globalist hellscape. All this decision does is hurts small businesses and international trade.... so dumb. I'm done with the spineless lefty conservatives, who are not conservative at all. China is gonna walk all over us....

 

[Khedron]

All that has happened is that prices WILL be going up. If people think that APPLE(used as an example) is going to take a 15% tax increase and just live with it then think again! How about a 15% increase in their pricing for that shiny new iPhone is more like it. Or like whats happening in the grocery stores it's the same price but less product. Companies work for a profit and they'll always make money. Just the way it is, folks.

Who cares. 15% extra for a luxury phone but society isn't decaying from decades of democracy being undermined by insatiably greedy billionaires. Not a difficult choice.