Billions are needed to absorb refugees, restore purchasing power, and build hundreds of thousands of homes. The Cabinet is busy searching for the billions needed for this. But the answer may lie in Brussels. After years of negotiations, it appears that the minimum European profit tax is within reach. But Poland voted against the proposal last week.
“The idea behind the proposal is actually quite simple,” says Paul Tang PvdA MEP. “The moment a multinational has a worldwide turnover of more than 750 million, and it’s really a big deal, and it’s operating in an area where less than 15 percent of taxes are paid, the state can adjust that so that the multinational does it. Already 15 percent paid.’ The European proposal aligns with an international proposal from the Organization for Economic Co-operation and Development, which was closed last October with 141 countries.
Poland
But Europe also wants to introduce a minimum profit tax jointly. “Poland had absolutely no objection when the proposal was discussed in the OECD,” Tang says. But the country used its veto when voting on the European proposal. Pressure from Europe on Poland is great, because the country does not adhere to the principles of the rule of law. This also involves financial stress. According to Tang, this action is a move by Poland in the fight with the European Union. Poland refused on the basis of incidental arguments. The question is how long the country will continue to do so.
Useful but complicated
Tang sees the benefit of a minimum dividend tax, as does tax attorney and partner at De Braauw Paul Sleurink. “There has been a trend some time ago to combat the use/abuse of the dividend tax.” And that, he says, is partly a result of that. Slewrink calls the concept of proposal simple, but the implementation complex. “As far as I’m concerned, there’s no reason not to include it, but it would be some math.”
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“Infinite groups come up with their own rules, look for elaborate exceptions, and that makes it very complicated,” Solorink says. “We have to prepare for a complex part of the new regulations.” It also points to tax authorities that are already in trouble. “It is possible, but it would be a problem.”
Calculate income tax
There is also a proposal to calculate the dividend tax differently. This is more complicated,” says Tang. The Organization for Economic Co-operation and Development is working to clarify this. “The idea is that if a company makes a profit in a country, but the company doesn’t have a branch there, the country in which the profit is being made can still tax.” Tang calls this a fundamental change in the tax system.It is also politically complex.Tang explains that this requires a treaty between nations.
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The big question is whether this will happen in the United States. It seems that US President Joe Biden wants to support the plan. But Congress makes the laws, not the government. The chance of the United States passing the necessary laws is very slim. Slyorinc sees a downside. “It is difficult not to participate in the country with the largest economy in the world.”
