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G7: Rich nations back deal to tax multinationals

bbc.co.uk

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Re: G7: Rich nations back deal to tax multinationals

#601

Post by rsj_hn »

CameronNemo wrote: post #549
rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

The executive is allowed to make executive agreements without consent of congress.

They can make all the agreements they want, but it's not a legal treaty until 2/3 of the Senate agrees, and even then, this stuff requires that laws be passed -- many laws affecting jurisdiction, accounting standards, and the tax laws themselves. None of this can be done with an executive agreement.

Re: G7: Rich nations back deal to tax multinationals

#602

Post by adrianb »

dalbasal wrote: post #203
orf wrote: post #2

Summary: > Firstly, the G7 want a global minimum tax rate so as to avoid a "race to the bottom" where countries can undercut each other with low tax rates. > Secondly, the rules will aim to make companies pay tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits. Good. It’s a shame that Biden had to back down from the initial 28% because of do…

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This is the problem with corporation tax generally. You can't really have a conversation about it in "normal" terms, that a journalist, politician or MOP can understand. It can only be understood via scenario plans and spreadsheets. It's a million little details. T…

Also it seems the agreement is that 7 countries agree that all countries in the world need to have that minimum rate? How would they convince the rest of 180+ countries? Especially, how do you convince the ones who would lose a lot of tax income by closing their tax heaven loopholes.

Re: G7: Rich nations back deal to tax multinationals

#603

Post by rufus_foreman »

ncallaway wrote: post #593
rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties—the most important step that makes it legally binding! But "reaching a deal" and "executing the agreement" are often different steps. When we have discussions with a client, and we negotiate on the terms we can reach an agreement on the negotiation before we actually execute the contr…

>> After reaching satisfactory terms in the agreement, I need to run the agreement by my business partner and ensure he approves

Do you think Mitch McConnell sees US Treasury Secretary Janet Yellen as his business partner? Or vice versa? That's your perception?

>> The G7 has reached a deal—that doesn't mean the deal is now effective or legally binding

So if I'm negotiating with you and you tell me we have a deal, I should consider that to be something that may or may not happen, may or may not be effective, and may or may not be legally binding?

Which car company do you work for?

Re: G7: Rich nations back deal to tax multinationals

#604

Post by PaulDavisThe1st »

a1369209993 wrote: post #583
Naga wrote: post #15

Earlier quoted context omitted.

It's complicated. "Money they made in their country" is hard to define. Large companies abuse intangible assets to shift profits around, but it's hard to say at what point abuse starts. For example, Google USA sells advertising to its clients. But, the assets it is selling are actually owned by Google Ireland. Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has n…

> Google Ireland charges Google USA a license fee of 100% of the revenue they made. Suddenly, Google USA has net profit of 0 and Google Ireland has a large net profit. That's irrelevant; Google USA made a gross profit of X G$ and should be taxed accordingly. If they want to claim some of that as a tax-deductable business expense, the burden of proof[0] is on them to demonstrate that it's a legitimate business expense…

> Google USA made a gross profit of X G$ and should be taxed accordingly. If they want to claim some of that as a tax-deductable business expense, the burden of proof[0] is on them to demonstrate that it's a legitimate business expense.

They've done this, repeatedly. The laws as written (US, UK, many other countries) make this a completely legitimate business expense.

So, what should the law require? How would you create a law that prevents this from being a legitimate business expense but doesn't eliminate other things that would be broadly agreed as being OK?

Re: G7: Rich nations back deal to tax multinationals

#605

Post by wolverine876 »

rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

> in the US, finance ministers don't have the power to agree to treaties

The U.S. Secretary of the Treasury speaks for the President; it's a fundamental dynamic of organizations. Otherwise, effectively Yellen wouldn't be Treasury Secretary - Yellen would be powerless and meaningless - and would resign or be fired. Only Trump seemed to ignore this and undermine the people under him. Also, I expect that the Treasury Secretary has great legal authority to make binding decisions for the U.S. government; remember that the American people decided the cabinet members would be separately confirmed by Congress (i.e., the Senate), per the Constitution.

Similarly, if the CFO of Apple makes an agreement, the counter-party assumes they speak for CEO Tim Cook. Otherwise, why talk to this person?

> Treaties in the US require a super-majority (two thirds) vote in the Senate.

Most international agreements are not treaties. The people of the U.S. delegate the power to conduct foreign affairs almost exclusively to the President, again in the Constitution. Only certain actions, such as treaties, require Congressional approval.

Re: G7: Rich nations back deal to tax multinationals

#606

Post by didip »

rjknight wrote: post #162

I do wonder if we wouldn't be better off eliminating corporation tax entirely. The revenue of a corporation can, roughly, be: 1. Spent on goods or services from another company (including freelancers, contractors, etc.) 2. Spent on rent 3. Spent on capital purchases 4. Spent on wages 5. Spent on debt repayment or other forms of financing 6. Paid out in dividends 7. Spent on share buybacks 8. Invested in something els…

I am with you, we should tax on things that are undodgeable and stop this wasted energy on corporate taxes.

* Property tax is 1 obvious place, you want the land in this country? You pay the tax for it.

* VAT is another obvious one. You want to sell in this country? You pay the tax.

There are plenty of things that can be taxed which are undodgeable, we just have to be creative.

Re: G7: Rich nations back deal to tax multinationals

#607

Post by wolverine876 »

ncallaway wrote: post #593
rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties—the most important step that makes it legally binding! But "reaching a deal" and "executing the agreement" are often different steps. When we have discussions with a client, and we negotiate on the terms we can reach an agreement on the negotiation before we actually execute the contr…

> You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties

It's not even that. Most international agreements are executed without a treaty.

Re: G7: Rich nations back deal to tax multinationals

#608

Post by pochamago »

adrianb wrote: post #602
dalbasal wrote: post #203

Earlier quoted context omitted.

The actual rate is the least important part. What is important is jurisdictional issues, accounting standards, corporate law, deferral rules and the like. This is the problem with corporation tax generally. You can't really have a conversation about it in "normal" terms, that a journalist, politician or MOP can understand. It can only be understood via scenario plans and spreadsheets. It's a million little details. T…

Also it seems the agreement is that 7 countries agree that all countries in the world need to have that minimum rate? How would they convince the rest of 180+ countries? Especially, how do you convince the ones who would lose a lot of tax income by closing their tax heaven loopholes.

These seven countries have a lot of sway, but even if it's only these countries that implement it it will likely affect a number of corporations. There are benefits to being legally located in stable modern economies, so this at the very least minimizes shopping around for the lowest tax rate among them.

Re: G7: Rich nations back deal to tax multinationals

#609

Post by OJFord »

rufus_foreman wrote: post #540

>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax No, it hasn't. Some finance ministers met and talked: "Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each ot…

Yes it has. Several other comments have pointed out 'reaching a deal' vs. 'it has been enacted everywhere'; I'll just add that it's not at all novel language, e.g. Brexit saw the UK & EU reaching deals before (or without ever) enacting them.

Re: G7: Rich nations back deal to tax multinationals

#610

Post by duped »

oblio wrote: post #454
MrPowers wrote: post #425

Earlier quoted context omitted.

San Francisco is an interesting case cause they used to have a land tax and economists argued that's what cause San Fran to be quickly rebuilt after it was burned to the ground in 1906. Land owners were still taxed the same, even though their building was gone. They'd have to either sell or rebuild. Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to…

That's works only if you're an investor. You're going to rebuild your home immediately, finance optimizations be damned.

But that's not what happened. People didn't rebuild their homes, they left and never came back.
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