Experts are concerned that President Joe Biden’s new global minimum tax rate of 15% on large multinationals will harm the SMEs that support them.
Treasury Secretary Janet Yellen confirmed on Saturday that leaders of the world’s 20 largest economies (G-20) have approved a “historical agreement” on new international tax laws, including the world’s lowest corporate tax rate of 15%. Did.
The new rules will also make it difficult for multinationals, including tech giants like Google, Amazon and Facebook, to avoid taxation by setting up offices in low-tax jurisdictions.
According to the Organization for Economic Co-operation and Development (OECD), it is estimated to generate approximately $ 150 billion in additional global tax revenue annually while stabilizing the international tax system and increasing tax certainty for taxpayers and tax authorities.
The new world minimum tax rate was endorsed by Biden, who praised Treasury Secretary Janet Yellen as a “game changer.” Told CNBC It provides “a global and equitable place for companies and countries to compete based on innovative ideas, fundamentals, workforce quality and business environment.”
“Countries around the world have decided to fund public infrastructure investments that need to be invested in their people and not burden workers with all the tax increases … this is more in a fair way. You can collect it, “Yellen said.
Biden also proposes an individual 15% tax rate, called the “Minimum Corporate Profit Tax,” which applies to about 200 US companies that make more than $ 1 billion annually.
Together, both tax rates will mean that the largest American company will pay a new tax of over 30%.
The Business Roundtable, which represents some of the largest companies in the United States, said the two tax bills would impose a $ 800 billion tax increase on companies, “the serious competitiveness that US companies face compared to foreign competitors. It exacerbates the disadvantages. “
But experts say the new 15% global minimum tax inadvertently harms US SMEs that support multinationals, exposing them and increasing the cost of doing business abroad. We are afraid that it may make it more difficult for those companies to enter overseas markets.
SMEs that rely on multinationals can also bear taxes, but SMEs that rely on multinationals for supply can have even higher costs amid the ongoing supply chain crisis and rising prices. There is sex.
“If you’re a large US-based company, you may not be doing everything yourself. Daniel Bunn, vice president of global projects at the Tax Foundation, an independent tax policy nonprofit, said: It states as follows. The Washington Times.. “It is these SMEs that are most exposed when large multinationals see significant tax increases.”
“If you’re a successful multinational company, you have the resources to navigate these rules, but that’s an additional layer of compliance to fill your small business,” Van continued. “It turns SMEs into acquisition goals rather than real competitors.”
The Washington Times quoted an August report by London-based multinational professional services network Ernst & Young, with a minimum tax of 500,000 to 1 million jobs and a $ 20 billion reduction in investment. I reported that there is a possibility of doing so.
“This will have a real impact,” Texas Rep. Kevin Brady, a Republican ranking member of the Houseways and Means Commission, told the outlets. “In the end, our foreign competitors will insist on a big bite of US tax revenue. None of this makes financial sense to the US. Indeed, here in the world, including at home. It doesn’t make sense for the ability to compete and win everywhere. “
The Epoch Times contacted the Treasury for comment.
President Joe Biden, who visited Rome for the G20 summit, said on Twitter that leaders “revealed support for a strong world minimum tax” and “more than just a tax system, diplomacy is ours. Reshape the world economy and provide it to our people. “
The minimum tax rate applies to companies with sales of more than € 750 million (approximately $ 870 million).
Governments can also set their own local corporate tax rates, but if a company pays a lower tax rate in a particular country, the government will “replenish” the tax by at least 15%, eliminating the benefits of shifting profits. can. Reuters reported.