Earlier this year, over 130 countries signed a global corporate tax reform agreement led by the OECD that aims to force international organizations to pay their fair share of tax of at least 15 percent.
The digitization and globalization of the world has created a mismatch between corporations and tax systems. Many large companies that manufacture intangible goods such as software have shifted their income to low-tax jurisdictions over the past 30 years and successfully avoided paying taxes in their home countries.
For example in 2019, Google UK has reportedly generated revenue of £ 1.6 billion (about $ 2.2 billion) but only paid £ 44 million (about $ 60.6 million) in taxes.
Average corporate taxes around the world have fallen dramatically in recent years. According to the tax foundation, the average corporate tax rate between countries in the world was 40.11 percent. This number has almost halved to 23.85 percent by 2020.
For the nearshore market, the OECD’s global tax reform could help stimulate economic growth by ensuring that some of the world’s largest companies pay taxes where they operate.
the IMF reported that tax havens cost governments up to $ 600 billion in lost corporate tax revenue in 2018. Of this, “around $ 200 billion goes to low-income economies,” and more than $ 150 to low-income countries in development aid.
Nearshore Americas spoke to Monserrat Colín, tax partner at auditing, advisory and tax law firm JA Del Rioto learn more about the breakthrough reform. Monserrat has elaborated on the key points of the reform and explained how Mexico is addressing change.
She discussed how the reform will aim to combat profit sharing and profit sharing (BEPS), the two pillar approach of the plan and the possible timetable for change.