• Explain it to me. Requesting attention and time from others by claiming the lack of personal time to look at a reference, feigned or real confusion (it's often hard to tell for certain), or by other means. Sometimes used as a setup for another circular argument.
https://wtop.com/national/explainer-deterring-tax-avoidance-by-global-companiesTHE PROBLEM: TAX HAVENS AND THE ‘RACE TO THE BOTTOM’
Most countries only tax domestic business income of their multinational companies, on the assumption that the profits of their foreign subsidiaries will be taxed where they are earned.
But in today’s economy, profits can easily slide across borders. Earnings often come from intangibles, such as brands, copyrights and patents. Those are easy to move to where taxes are lowest — and some jurisdictions have been only too willing to offer reduced or zero taxation to attract foreign investment and revenue, even if companies do no real business there.
As a result, corporate tax rates have fallen in recent years, a phenomenon dubbed a “race to the bottom” by U.S. Treasury Secretary Janet Yellen.
From 1985 to 2018, the worldwide average corporate statutory tax rate fell from 49% to 24%. From 2000-2018, U.S. companies booked half of all foreign profits in just seven low-tax jurisdictions: Bermuda, the Cayman Islands, Ireland, Luxembourg, the Netherlands, Singapore and Switzerland. The OECD estimates tax avoidance costs anywhere from $100 billion to $240 billion, or from 4% to 10% of global corporate income tax revenues.
That’s money governments could use as they see deficits rise from spending on pandemic relief.
THE SOLUTION: THE GLOBAL MINIMUM TAX
The talks seek to put a floor under corporate tax rates by having countries legislate a minimum that they would levy on untaxed foreign income. In other words, if Company X headquartered in Country Y paid no or little tax on profits in Country Z, Country Y would tax those profits at home up to the minimum rate.
That would remove the reason for using a tax haven, or for setting one up. Biden has proposed a 15% floor for the global talks, though it could be higher.
https://money.usnews.com/investing/news/2021-10-08/explainer-what-is-the-global-minimum-tax-deal-and-what-will-it-meanA global deal to ensure big companies pay a minimum tax rate of 15% and make it harder for them to avoid taxation has been agreed by 136 countries, the Organisation for Economic Cooperation and Development said on Friday.
HOW WOULD A DEAL WORK?
The global minimum tax rate would apply to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.
Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could "top up" their taxes to the 15% minimum, eliminating the advantage of shifting profits.
A second track of the overhaul would allow countries where revenues are earned to tax 25% of the largest multinationals' so-called excess profit - defined as profit in excess of 10% of revenue.
