Some 140 countries aim to finalise the first major overhaul in generation of the rules for taxing multinationals at a meeting on Friday so the deal can be endorsed by the Group of 20 economic powers later this month.
“A definitive agreement on international taxation for the 21st century is at hand, it’s now or never,” Le Maire told journalists.
Until now 134 out of 140 countries in the talks had backed a minimum rate of “at least” 15%, but Ireland, which has lower taxes compared to others, has so far refused to sign up over concern the rate could end up being higher than 15%.
Le Maire, who had previously pushed for a higher rate, said that while a compromise on 15% was possible, there remained a major blocking point over how big a deduction from the global minimum should be possible for multinationals based on their assets and payroll in foreign markets.
“It’s not the rate that is the biggest problem, Ireland’s position is evolving on this subject and a compromise can emerge at 15% as the real effective minimum taxation,” Le Maire said.
The minimum rate is supposed to discourage multinationals from booking profits in low-tax countries like Ireland, which has a corporate tax rate of 12.5%, regardless of where their end customers are.
However, some countries such as Poland and other eastern European countries want a large deduction from minimum rate to reflect real corporate activity because they frequently offer reduced rates to entice foreign investors to build plants.
Le Maire said France supported a deduction that would be based on 7.5% for assets and 10% for payroll over a 10-year transition period.
Once an agreement is reached then governments would be expected to bring the new rules onto their statute books next year so that they take effect in 2023.
Source: Economy - investing.com
