The finance ministers of the major industrial and trade states, including Vice Chancellor Olaf Scholz (SPD), have agreed in Venice on plans for a minimum tax of 15 percent to prevent tax evasion and on a new distribution of the rights to tax international companies among the states. The final issues should be resolved by October, when the heads of government of the G20 states should agree.
“There is no turning back”
French Finance Minister Bruno Le Maire described the agreement in Venice as an opportunity for the century. “There is no turning back. We put an end to the tax race to the bottom,” he said. US Treasury Secretary Janet Yellen agreed: “The world is ready (…) and there is a broad consensus on how this should be done: with a global minimum tax of at least 15 percent,” Yellen said. She called for the agreement to be implemented quickly.
Ministers called on those countries that have so far rejected the plans to join the agreement. Federal Finance Minister Olaf Scholz (SPD) spoke of a “historic” decision.
The agreement should create a” more stable and fairer international tax architecture, ” the final statement added. On 1 July, the Organisation for Economic Co-operation and Development (OECD) achieved a breakthrough in negotiations on a global minimum tax for large corporations. 132 out of 139 members of the OECD’s Inclusive Framework are currently supporting the project.
“Finally, large corporations can no longer evade their tax obligations,” Scholz wrote in the online service Twitter. “Now it’s time to implement it so that the tax can take effect from 2023.«
Criticism from the Union
The Union faction in the Bundestag criticized the decision. “Instead of a big step towards more tax justice, we are experiencing exactly the opposite,” said the CDU MP Antje Tillmann, finance policy spokeswoman for the Union group, on Saturday. None of the goals of the OECD project on the reform of the World Tax System, which the group had supported since the beginning, would be achieved with the reform now adopted.
Almost all 139 OECD countries have already approved the reform at the working level, including well-known tax havens. On the other hand, the three EU states Ireland, Estonia and Hungary are among the refusers. A treaty under international law is to be concluded for the new distribution rules. The minimum tax must be implemented individually in the states.
“It is completely unclear who will keep their word here in the next few years”
“Originally, the idea was to limit ruinous tax competition. Instead, despite the agreement, the 132 states that agreed can now choose for themselves whether to introduce minimum taxation,” criticized Tillmann. “It is completely unclear who will keep their word here in the next few years. It is even unclear whether the EU will participate, since three member States are among the seven critics, but we need their approval for an EU-wide introduction.”Exemptions for the financial sector and the extractive industries also consolidated” the exploitation of developing countries and leave them alone in international tax competition, ” she complained.
The scheme is expected to affect less than 10,000 companies worldwide. Nevertheless, with a minimum tax of 15 percent, the OECD expects more than 126 billion euros in additional tax revenue per year.
