Minimum business tax expected to raise more than 200 billion euros

The minimum global tax on multinationals could bring more money than expected into the state budget: at least 220 billion dollars (203 billion euros), according to a new estimate. A previous calculation, carried out two years ago, amounted to 150 billion dollars (138 billion euros) the sum levied on large companies at the end of this tax revolution.

This minimum tax is the main innovation of a vast global reform of corporate taxation currently underway. It has been discussed for several years within the framework of the OECD (Organization for Economic Co-operation and Development). In October 2021, under the auspices of this organization, 140 countries succeeded in agreeing on the principle of this reform, which is now being implemented.

Avoid the race to the lowest tax bidder

The measure having the most impact is the minimum tax of 15% on the profits of large multinational companies. It must concern all companies that generate more than 750 million dollars in turnover.

This measure should make it possible to avoid the race to the lowest tax bidder between States, each trying to attract the headquarters of large companies to their country. Such competition has taken hold, including within the European Union, and will therefore find itself limited. The tax must also make tax havens lose all their attractiveness, because if a State taxes a company’s subsidiary at less than 15%, it will be possible for the country where the company’s head office is located to deduct the amount not received, up to 15% of the profit.

The new impact study presented on January 18 by the OECD calculates that the gains will represent an annual increase of “9% of global revenue from corporate tax”. The upward revision of expected revenues is explained in particular by “the increase in the profitability of multinational companies”, explains the OECD.

In the EU, the tax will apply in 2024

For this reform to enter into force, each State must now introduce this measure into its national law. The European Union (EU) was among the first to do so. It unanimously adopted a directive to this effect last December. The tax will be in force across the EU on January 1, 2024.

According to a count of the newspaper Les Echos, this tax has also been introduced by South Africa, Australia, Canada, South Korea, Hong Kong, Jersey, Malaysia, New Zealand, the United Kingdom , Singapore, Switzerland. The United States has also done so, but with a slightly different threshold of application: it affects companies with more than 1 billion dollars in turnover.

A second measure contained in this reform plans to move part of the rights to be taxed to countries where companies make profits, and not only to those where they have employees. This measure targets digital giants, such as Google or Facebook, which make big profits in France, but prefer to base many of their French employees in Ireland.

US Republicans could block

This measure must be implemented through an international treaty. It is still being drafted by OECD experts. The text should see the light of day in February. Then all the countries associated with this tax revolution will have to ratify it.

In the United States, it will take a vote of 60 senators. This means that at least nine Republican senators will have to agree to support the text. Such a majority is by no means assured. In Europe, the text should not cause too many difficulties. But without the United States, it will be difficult to implement it.

According to the new OECD estimate, this measure has much less impact than the first: it “is expected to result in annual tax revenue gains of between $13 billion and $36 billion, based on 2021 data”. , or 12 to 33 billion additional euros which could go into the coffers of the States. Apart from the digital sector, it should also affect the giants of luxury, pharmacy or agrifood.

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