130 countries support the G7 plan for a minimum corporate tax rate of 15 percent. This was stated by the Organization for Economic Co-operation and Development (OECD). Nine countries disagreed.
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The agreement has been in place for several years, but PNR’s resident economist Hon de Zhang says reaching an agreement with several countries is a lot of work. The new US administration is now making progress. Biden management already wants to raise taxes for business in the United States anyway.
Line competition
De Zhang estimates that companies can live up to 15 percent with a minimum tax rate; They make enough profit. Business tax rules now vary from country to country. In addition, there are many mutual tax agreements. De Zhang says it makes sense for companies to try to make as much profit as possible from this. What is annoying is that it creates mutual competition between countries based on those taxes. With the new agreement, limits are now set for that ‘tax match’.
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Nine non-participating countries are the European countries of Hungary and Estonia, as well as Ireland, which is known as a tax haven. For example, Apple and Google have key functions in Ireland. The Irish media has been widely reporting for months on how much the new deal will cost the country. De Zhang did not think Ireland could bypass the new rules by not signing. Other countries will put an end to it. Ireland has said it will compromise on the process. De Zhang expects the country to finally sign.
Netherlands
Although our country is known as a tax haven, only the Netherlands participates. The Netherlands is not very competitive in tax rates – it is compatible with many countries here. De Zhang says that our competition is to make all kinds of facilities available. In the Netherlands companies can make attractive deals in advance with tax authorities. It is not yet clear to what extent this agreement will control this.
