Corporate Tax

130 nations be a part of historic corporate tax treaty

Here’s today’s foreign policy: 130 countries agree to a 15 percent fix global minimum corporate tax rate after years of negotiations, Federal Chancellor Angela Merkel visits the UK and Israel bombs Hamas targets in Gaza Strip.

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Here’s today’s foreign policy: 130 countries agree to a 15 percent fix global minimum corporate tax rate after years of negotiations, Federal Chancellor Angela Merkel visits the UK and Israel bombs Hamas targets in Gaza Strip.

If you would like to receive the Morning Brief in your inbox every weekday, please register here.

130 countries agree corporation tax minimum

On Thursday, 130 countries agreed on a historic corporation tax treaty that, after years of negotiations led by the OECD, approved a proposal to set a minimum corporate tax rate of 15 percent.

EU foreign policy chief Josep Borrell hailed the deal as a breakthrough for “more regulated globalization,” while US President Joe Biden said it brought the world closer to “stopping the race to the bottom” in corporate taxes , when he recalled his campaign aim of a “foreign policy for the middle class”.

Although the deal brings together more than 90 percent of the world’s economies, there is still work to be done before it becomes a truly global deal. The negotiators managed to get multinational favorites like Switzerland and Barbados on board, but nine countries are still holding out – including the European economies of Estonia, Hungary and Ireland, which have yet to sign.

With the lower bound set so low, countries shouldn’t expect a major stroke of luck. The deal could result in a $ 150 billion increase in global tax revenues from 2023, the OECD said in a statement. No mention was made that around 60 percent of these new funds are likely to be reclaimed from the G-7.

A higher minimum. Developing countries are still pushing for a higher minimum. In a declaration, the 37 member states of the African Tax Administration Forum approved the agreement in principle, but vowed to continue their campaign to increase the minimum rate to at least 20 percent. A higher rate is essential for African nations, the group said, pointing to the greater reliance on corporate tax revenue as a share of total tax revenue in their countries than in more affluent countries.

Falling tax rates. Nevertheless, it could help to halt a trend of falling corporate interest rates over the past few decades. According to the tax foundation, the average corporate tax rate in 1980 was around 40 percent worldwide; that number has dropped to 23.85 percent in 2020.

What we are following today

Merkel in Great Britain Chancellor Angela Merkel is traveling today for her 22nd and probably last official visit to Great Britain before the end of her term in September. Merkel is scheduled to meet British Prime Minister Boris Johnson, Queen Elizabeth II, and give a speech in front of the British cabinet – making her the first foreign head of state since President Bill Clinton in 1997.

Their trip takes place amid ongoing disagreements between the European Union and the UK over the Northern Ireland Protocol to the Brexit deal, despite negotiators agreed on Wednesday to extend a grace period for trade in certain goods. In a statement before her arrival, Johnson praised Merkel for leaving British-German relations “with renewed energy and vigor for a new era”.

Israel bombs Gaza targets. Israeli fighter jets bombed a Hamas arms factory in Gaza on Thursday evening in retaliation for firing balloons floated into Israeli territory, Israel’s military said, the last military operation carried out in Gaza since new Prime Minister Naftali Bennett took office in June. On Thursday, Bennett said his government would “not hesitate” to launch a ground campaign in Gaza if necessary.

J&J and the Delta variant. Johnson & Johnson’s COVID-19 vaccine is effective against the Delta variant of the virus, the company said Thursday, dispelling concerns about its effectiveness after vaccine makers Pfizer, Moderna and AstraZeneca showed all data suggestive of protection indicate against the variant. The company also said its single-use vaccine was effective for at least eight months after administration, a limit health planners must consider as vaccine stocks remain limited in most countries.

Zuma’s countdown. Former South African President Jacob Zuma has until Sunday to present himself to the authorities or face arrest after being sentenced to 15 months in prison on Wednesday for disobeying the court. Zuma’s foundation described the verdict against him as “emotional”, “angry” and “inconsistent with our constitution”. Zuma’s lawyers have yet to formulate an answer to the court’s ruling.

Pandemic travel. The World Health Organization urged western nations to accept the vaccination status of those vaccinated with WHO-approved Chinese vaccines as cross-border travel becomes possible. Failure to do so, said a statement from the WHO on Thursday, “would effectively create a two-tier system that continues to widen the global vaccine gap and exacerbate the injustices we have already seen in the distribution of COVID-19 vaccines” and “Trust in” undermines life-saving vaccines that have already been shown to be safe and effective, “the agency added.

Although the Chinese vaccines Sinovac and Sinopharm were found to be less effective than their Western counterparts, a WHO review found that both significantly reduced the likelihood of hospitalization and death.

bits and pieces

The European Union is well on the way to banning the keeping of farm animals in cages as part of new proposals for ethical agriculture, which are currently being examined following a successful public petition for the “end of the cage age”. According to EU law, the European Commission must consider citizens’ petitions if they collect more than 1 million signatures in two thirds of the member states. On Wednesday, the commission reacted and outlined steps to achieve cage-free agriculture by 2027.

“Animals are sentient beings and we have a moral, social responsibility to ensure that conditions for animals on farms reflect this,” said EU Health and Food Safety Commissioner Stella Kyriakides on Wednesday.

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