{"id":141264,"date":"2021-10-09T21:08:03","date_gmt":"2021-10-09T21:08:03","guid":{"rendered":"https:\/\/precoinnews.com\/?p=141264"},"modified":"2021-10-09T21:08:03","modified_gmt":"2021-10-09T21:08:03","slug":"global-tax-plan-wins-support-from-130-countries","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/global-tax-plan-wins-support-from-130-countries\/","title":{"rendered":"Global tax plan wins support from 130 countries"},"content":{"rendered":"<p><cite>London (CNN Business)<\/cite>One of President Joe Biden&#8217;s priorities is a historic overhaul of global tax rules. The world&#8217;s most powerful 20 economies are on board. But an island nation of 5 million people is standing in the way.<\/p>\n<p>Biden still needs Ireland.<br \/>\nFor years, the country has successfully attracted hordes of global businesses with a corporate tax rate of just 12.5%, compared to 21% in the United States and 19% in the United Kingdom. <span>Facebook<\/span> <span>(<span>FB<\/span>)<\/span>, <span>Google<\/span> <span>(<span>GOOGL<\/span>)<\/span> and <span>Apple<\/span> <span>(<span>AAPL<\/span>)<\/span> have set up regional headquarters in the country, while pharmaceutical companies like <span>Pfizer<\/span> <span>(<span>PFE<\/span>)<\/span> have built manufacturing hubs.<\/p>\n<ul><\/ul>\n<p>Now, with 132 governments around the world in agreement on a minimum corporate tax of at least 15% to ensure big business pays its fair share, Ireland is digging in its heels.<\/p>\n<ul><\/ul>\n<p>&#8220;We are not in that agreement,&#8221; Finance Minister Paschal Donohoe recently told Irish media.<\/p>\n<p>Political pressure could yet force Ireland&#8217;s leaders to relent. Donohoe met with US Treasury Secretary Janet Yellen last week and said talks were productive. Yellen told reporters that Ireland, along with fellow European Union holdouts Hungary and Estonia, &#8220;want to find a way to get to yes.&#8221;<br \/>\nBut Ireland&#8217;s opposition highlights the obstacles that remain as governments try to transform public support for the ambitious project into actual policy. Ireland is thought to be holding out to see if Biden can rally enough support in Washington. And even if Ireland ultimately signs on, experts on European Union law think implementation in the bloc could be tricky.<br \/>\n&#8220;These plans always take longer to implement and legislate than is talked about,&#8221; said Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics.<\/p>\n<p><img decoding=\"async\" alt=\"A view of Google&amp;#39;s building in Dublin&amp;#39;s Grand Canal area.\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210716115133-restricted-google-dublin-ireland-0610-large-169.jpg\"><\/p>\n<h3>Ireland&#8217;s low-tax legacy<\/h3>\n<p>In 2016, something spectacular happened in Ireland: In a shock revision of official data, the country reported that its economy had grown by more than 26% the previous year.<br \/>\nUnemployment was down, and government finances were being carefully managed. But the real reason output soared was that global companies had moved parts of their business to the Emerald Isle.<br \/>\n<img decoding=\"async\" alt=\"President Biden wins global support for massive tax overhaul \" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210701122757-joe-biden-0630-large-169.jpg\"><\/p>\n<p>&#8220;This revision can be seen as an effect of increasing globalization,&#8221; the European Commission said in a memo. &#8220;It is primarily due to the relocation to Ireland of a limited number of big economic operators.&#8221;<br \/>\nThe episode underscores just how effective the country has been in recruiting multinational firms, which have been drawn in part because of a 12.5% corporate tax rate that&#8217;s been in place since 2003.<br \/>\n&#8220;A low corporate tax rate has been one of the factors that has made Ireland attractive to foreign direct investment,&#8221; said Iulia Siedschlag, associate research professor at the Economic and Social Research Institute in Dublin. &#8220;Clearly multinationals have made and make a substantial contribution to economic growth.&#8221;<br \/>\nThe presence of foreign companies helped Ireland recover from the global financial crisis and subsequent European debt crisis. While Ireland needed &euro;68 billion ($80 billion) in international bailout loans in 2010, after its property market collapsed and banks started failing, its economy was growing at an eye-popping rate of more than 8% by 2014.<br \/>\nTax receipts from multinational companies also gave government finances a crucial boost during the Covid-19 pandemic. In 2020, Ireland was the only EU economy to grow instead of contract.<br \/>\nDonohoe has emphasized his commitment to working with other countries and the Organization for Economic Cooperation and Development, which is coordinating the tax talks. But he&#8217;s expressed concern that a deal could damage one of Ireland&#8217;s big economic advantages.<br \/>\n&#8220;While the potential revenue loss depends on many factors, my department&#8217;s estimate is that corporation tax could be impacted by up to &euro;2 billion annually over the short to medium term,&#8221; he recently told lawmakers.<\/p>\n<h3>Holding out<\/h3>\n<p>Ireland, whose backing is needed for the European Union to ultimately issue a directive on the matter, is under significant pressure to soften its stance.<br \/>\nBefore a meeting of the Group of 20 finance ministers earlier this month, countries including India, China and Switzerland came out in favor of the OECD reform plan,<strong> <\/strong>backing the minimum tax of at least 15% and a related provision that would force<strong> <\/strong>the biggest companies to pay tax where they generate sales and earn profits, and not just where they have a physical presence. That could have have major ramifications for top tech companies like Google and Amazon.<\/p>\n<blockquote>\n<p>The political traction is stronger than it&#39;s ever been.&quot;<\/p>\n<p>Professor Robert Danon<\/p>\n<\/blockquote>\n<p>Last week, the European Union announced that it was delaying its proposal for a digital tax that would have interfered with talks, another indication of growing support.<br \/>\n&#8220;The details must be finalized, but the political traction is stronger than it&#8217;s ever been,&#8221; said Robert Danon, a professor of international tax law at the University of Lausanne in Switzerland.<br \/>\nThere&#8217;s good reason to think Ireland will eventually capitulate. Per the proposal, if a global minimum tax of 15% is agreed and Dublin doesn&#8217;t change its statutory rate, the United States would be able to step in and collect the remaining 2.5% of tax owed by an American firm, for example, on its profits recorded in Ireland. At that point, Ireland may as well make the changes needed to net that revenue itself.<br \/>\n&#8220;At the end of the day, if you have a critical mass of countries adopting the framework, that&#8217;s it,&#8221; Danon said.<br \/>\nSiedschlag notes, however, that a &#8220;major concern&#8221; for Ireland&#8217;s leaders is the possibility that a global minimum tax rate could ultimately be pegged higher than 15%, an option that remains on the table.<br \/>\nThe country could likely absorb a 2.5 percentage point rise, she said. But if consensus builds around a 21% global minimum tax, that would erase Ireland&#8217;s competitive edge on taxes versus the United States,<strong> <\/strong>the source of more than 50% of foreign direct investment in the country.<\/p>\n<p><img decoding=\"async\" alt=\"Paschal Donohoe, Ireland&amp;#39;s finance minister, and US Treasury Secretary Janet Yellen arrive at a meeting of EU finance ministers in Brussels, Belgium, on Monday, July 12.\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210716115449-restricted-paschal-donohoe-janet-yellen-0712-large-169.jpg\"><\/p>\n<h3>Not just Ireland<\/h3>\n<p>Ireland isn&#8217;t the only obstacle standing between the Biden administration and an overhaul of global tax rules.<br \/>\nHufbauer believes that once the details of the tax plan are released, it will &#8220;run into very serious objections in the US Congress&#8221; as lawmakers run the numbers on how top American companies would be affected. Reapportioning the US tax base will also involve overriding existing US bilateral tax treaties, which Hufbauer describes as a &#8220;a very tedious process&#8221; that won&#8217;t sit well with some senators.<br \/>\nGerard Brady, chief economist at Ibec, Ireland&#8217;s business lobby, said his country&#8217;s government is right to withhold its backing while Biden tries to determine what&#8217;s feasible domestically.<br \/>\n&#8220;The decision not to make commitments until we can see what the US Congress can pass makes strategic sense,&#8221; he said.<br \/>\nAdditionally, while European Union leaders support the OECD proposal, actually turning it into law in the bloc could be tricky, given the complex web of existing rules and regulations, said Adolfo Mart\u00edn Jim\u00e9nez, chairman of the European Association of Tax Law Professors.<br \/>\nTalks will continue in the coming months, with the goal of landing on a final plan for implementation by October. Ireland has said it will continue to actively participate.<br \/>\n&#8220;We are committed to the negotiation to see if we can enter the agreement at some point,&#8221; Donohoe said last week.<\/p>\n<ul><\/ul>\n<p>But the Irish government&#8217;s reluctance is a reminder that rewriting global tax rules won&#8217;t be easy, despite unprecedented political support \u2014 and that&#8217;s even before you dig into what&#8217;s actually in the plan.<br \/>\n&#8220;An agreement to establish a global minimum tax of at least 15% is a major step forward. But the devil is in the details,&#8221; the Nobel Prize-winning economist Joseph Stiglitz wrote earlier this month.<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2021\/07\/20\/economy\/ireland-global-tax-deal\/index.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>London (CNN Business)One of President Joe Biden&#8217;s<\/p>\n","protected":false},"author":3,"featured_media":141263,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Global tax plan wins support from 130 countries - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/global-tax-plan-wins-support-from-130-countries\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Global tax plan wins support from 130 countries - 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