Finance Minister Says Canada Pledged to Proposed Global Corporate Tax Rate – Castlegar News
Canada strongly supports a two-pillar plan to implement sweeping reforms to the global corporate tax system and limit the ability of multinational companies to seek lower tax rates, the finance minister said on Saturday. from the country.
Chrystia Freeland and her counterparts from the other Group of 20 countries, which account for the bulk of global economic activity, formally endorsed the proposed reforms at a meeting in Venice, Italy.
Freeland said the plan’s first pillar includes assigning taxing rights to market jurisdictions where the world’s largest multinational companies do business, whether or not they have a physical presence, she said. declared.
The second part involves a global minimum 15% corporate levy to deter large corporations from resorting to low-rate tax havens, a system that has cost governments around the world billions of dollars.
“It really brings the global tax system into line with the realities of the 21st century global economy,” Freeland said on a teleconference Saturday. “This is an opportunity for us to act together to put an end to tax arbitration, to end shopping for jurisdiction by multinationals.”
A global minimum corporate tax rate is now supported by 132 countries, she said.
The Paris-based Organization for Economic Co-operation and Development is set to spell out key details of the proposal before G20 leaders make a final decision at their October 30-31 meeting in Rome.
Freeland said the deal could “end the race to the bottom in corporate taxation around the world and ensure that all multinational companies pay their fair share of taxes, regardless of where they operate. or their head office “.
It could also level the playing field for Canadian businesses by ending skills shopping, ensuring that the country’s workforce and social safety net are globally competitive, she added. .
The international tax proposal aims to deter the world’s largest companies from using accounting and legal schemes to shift profits to countries where little or no tax is due – and where the business can do little or no real activities.
Under the proposed minimum rate, companies that evade taxes abroad would pay them at home, thus removing incentives to use or create tax havens.
A second part of the plan would allow countries to tax a portion of the profits of companies that make profits without a physical presence, such as through online retailing or digital advertising.
This pillar took shape after France, followed by other countries, imposed a digital services tax on US tech giants such as Amazon and Google. The US government views these national taxes as unfair trade practices and wields the threat of retaliation against imports from these countries to the United States through higher import taxes.
The terms of the proposed deal would see these countries drop or withhold national taxes in favor of a single global approach, in theory ending trade disputes with US tech companies would then face only one. tax regime, instead of a multitude of different national digital taxes.
If the deal is approved, implementation could start as early as 2023 but would depend on action at the national level.
The draft proposal was approved on July 1 in talks among more than 130 countries convened by the OECD.
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This story was produced with the financial assistance of Facebook and the Canadian Press News Fellowship.
The Canadian Press