Since 2017, the OECD aims to implement a large-scale tax project (OECD/G20) introducing a global tax for multinationals in the digital economy. The organization’s project distinguishes two pillars:
• Pillar 1, profit distribution and structure: This pillar focuses on a redistribution of taxable profits in countries of consumption of goods and services for multinationals and establishes an effective tax rate without the need for a physical presence on their territory.
• Pillar 2, minimum global taxation: implementation of a minimum tax of 15% for multinationals. Market courts will then be able to impose a minimum amount of profits when the turnover of companies is 750 million euros.
This tax project aims to fight against the transfer of profits to tax havens and fight against tax erosion for the giants of the digital economy. Although this tax project has two branches, it is particularly Pillar 2 that has been chosen by the countries thanks to the support of the United States. Pillar 2 was due to come into force in 2024, but no action has yet been taken. Indeed, the American requirements greatly hinder the project since the taxation project still has to be ratified by the Senate. A lack of ratification could lead to higher taxes for companies in the digital sector. China, the United States’ main concept of the digital economy, has expressed reservations about certain requests made by the US preferring to apply its own taxation.
The position of these two countries shows that this tax is not necessarily accepted by all governments. Indeed, although the USA has been one of the promoters of this pillar, it is not because it is favorable for their company but because it was the least unfavorable solution. This tax could potentially impact the competitiveness of US companies.
The implementation of this new tax rule requires cooperation between different governments and multinationals. It is also necessary to find efficient technologies for calculating profit flows by jurisdiction related to an effective tax rate calculation.
The future of this pillar could look promising however the lack of implementation of this regulation in the two largest countries of the digital economy shows the complexity of implementing a global minimum tax. In addition, for companies subject to this global minimum tax, compliance rules will be costly, which may cause discontent from their home country.
Source :
- Fiscalité numérique, Université de Strasbourg dispensés par le Professeur B. Treascher
- https://www.lesechos.fr/monde/enjeux-internationaux/la-taxe-mondiale-sur-les-gafa-dans-limpasse-a-locde-2099365