The international community has never been so close to an agreement on how to tax multinationals in the age of globalization and digital technology, the famous super “GAFA tax” (Google, Apple, Facebook, Amazon), who needs to bring fairness to the tax system. But as the project becomes technically clearer, at a time of real political choices, many obstacles still have to be removed: agreeing on the scope of the tax – only the GAFAs, or all the multinationals selling to distance – and on the precise distribution keys of the new tax, between the countries, where companies are established, and their “market” countries, where their customers are located … all in a stressed political climate, between the presidential election and the management of the Covid-19 pandemic, and against a background of latent opposition from tax havens.
Here is, summarized, the situation which prevails, whereas the Organization for Economic Co-operation and Development (OECD), great architect of the project, must present its detailed plan, Wednesday, October 14, to the finance ministers of the G20 (the nineteen richer countries, plus the European Union). The G20 should then congratulate the OECD and the fine work carried out by its teams, despite the abrupt end to negotiations, under the effect of the pandemic. And hope, finally, of an agreement for mid-2021, or more reasonably the end of 2021, with a year behind the initial schedule. By this time, the world could have a new tax system adapted to the “2.0” universe, combined, the icing on the cake, with a minimum global tax rate for multinationals of around 12.5%. Clearly, companies that escape tax would be reintegrated into the system.
Half the way has been done
Without delay, Olaf Scholz, the German finance minister, declared on October 9, after a preparatory meeting with 131 of the 137 countries represented in the discussions at the OECD, that an agreement had been reached on the reform proposals: “It’s a positive signal, and I’m sure that by the summer [2021], we will be able to reach a final agreement. “ A political declaration intended to support the chances of a global agreement. Because the situation is more complex than it seems: half the way has been done. The glass is half full, since the future tax now has a detailed architecture. But half empty, if we consider the questions and unresolved rallies, starting with that of the United States.
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