Global agreements on a profit tax floor for large multinationals could be possible within a few months. This was stated by German Finance Minister Olaf Scholz in an interview with German media. He indicated indications that the United States, under President Joe Biden, would also support such a plan.
Biden’s tax policy clearly differs from that of his predecessor, Donald Trump. The US government has recently come up with big investment plans for the coming years. The cost of this will have to be partially covered by a corporate tax hike from 21 to 28 percent, largely mirroring the earlier cut in the Trump era.
Under the leadership of the Organization for Economic Cooperation and Development (OECD), countries have taken measures to combat international tax evasion for some time. Schulz, the Social Democratic candidate for German chancellor in the September elections, believes that the United States will also cooperate with the recent developments in Washington. The minister estimates that agreements could then be struck in the summer on a minimum profit tax floor.
Regulating the global tax system in a more equitable manner is a difficult issue. But the pressure on governments to show decisiveness is increasing. The rule that multinational corporations only pay taxes in countries with a physical presence in them has become increasingly outdated in the internet age. Large tech groups like Amazon or Apple often set up subsidiaries in tax-attracting countries. At the same time, they make huge returns in other countries that don’t see this in their coffers.
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