Corporate Tax

World minimal tax answer in opposition to falling corporate tax charges

The data underscores the importance of the two-pillar plan driven by over 130 members of the OECD / G20 Inclusive Framework on BEPS to reform international tax rules and ensure that multinational corporations receive an appropriate tax share wherever they operate pay.

The falling corporate tax rates in all countries underscore the importance of a global minimum corporate tax rate, as the OECD found.

New data published in the annual publication of the OECD Corporate Tax Statistics shows the importance of corporate tax as a source of government revenue, while pointing to signs of persistent tax base erosion and profit shifting.

Data released today shows that corporate tax is an important source of revenue for governments to fund essential public services, especially in developing and emerging countries. On average, corporate tax in Africa (19.2 percent) and Latin America and the Caribbean (15.6 percent) make up a higher proportion of total taxes than in the OECD countries (10 percent).

The data also shows that statutory corporate tax rates have decreased in almost all countries over the past two decades. Of 111 countries, 94 had lower corporate tax rates in 2021 compared to 2000, while 13 countries had the same tax rate and only 4 had higher tax rates. The average combined statutory corporate tax rate (central and sub-central government) for all jurisdictions covered decreased from 20.2 percent in 2020 to 20.0 percent in 2021, compared with 28.3 percent in 2000.

“These falling rates underline the importance of the second pillar, which will set a multilaterally agreed limit on competition in corporate taxes,” the OECD stated.

According to the OECD, the data underscores the importance of the two-pillar plan being promoted by over 130 members of the OECD / G20 Inclusive Framework on BEPS to reform international tax rules and ensure that multinational corporations are unified wherever they operate pay an appropriate share of the tax.

As part of the two-pillar solution for overcoming the tax challenges arising from the digitization of the economy, the first pillar would shift some tax rights vis-à-vis multinational companies (MNEs) from their home countries to the markets in which they do business and Generate profits. regardless of whether companies are physically present there. The second pillar aims to stifle corporate tax competition by introducing a global minimum corporate tax rate that countries can use to protect their tax bases.

The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and regularly writes news on transfer pricing and international tax law. Alex can be reached at editor@transferpricingnews.com

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