U.S. Treasury Secretary Janet Yellen has proposed a global minimum corporate tax rate to stop a "race to lower tax rates" and create a uniform fiscal environment for large companies in all developed countries. If a single minimum rate is not introduced, American companies will continue to migrate to more attractive jurisdictions, the head of the U.S. Treasury acknowledged. As a result, the U.S. budget will lose $2 trillion in tax revenue over the next 10 years. <...>
According to the Financial Times (FT), the U.S. administration has sent its proposals for a global corporate tax rate to the governments of 130 countries. It is assumed that about a hundred major international corporations, including American Internet giants (Google, Amazon, Facebook, etc.) and global financial corporations would be subject to the same rate. Initial reactions to the initiative have been very positive. In the EU, as the FT notes, it was "welcomed with applause," because now there is no need to impose a "digital tax" on U.S. corporations. <...>
Implementing the initiative, according to experts interviewed by Vedomosti, would not require complex global negotiation processes. Most likely the countries with favorable tax regimes will be faced with the fact: either set a specified rate of corporate tax or companies with offshore registration will be forced to change the tax residency under pressure from national authorities.
And as for the consequences for the largest corporations themselves, the experts are divided. Lawyer of the law firm Tax Compliance Andrey Solomyanyy believes that corporations are ready for such developments, as the very topic of a flat rate of corporate tax has been discussed since 2017. <...>
On the other hand, setting a flat tax rate internationally could be a disincentive for individual countries in situations where its change would be required by economic reality - for example, if there is an urgent need to stimulate industrial growth. Solomyanyi is sure that the options for changing the rate depending on the international economic situation will be provided at the level of corresponding treaty resolutions. In his opinion, the problem is different: introduction of the global rate, which implies increase of taxes, in conditions of general recession of the international economy and bloated stock market will damage the economic recovery, but will not be able to fill the state budgets quickly.
"Real corporate tax revenues cannot be expected until 2022, because in the U.S. the tax is paid concurrently with the filing of the annual report - by March 15 of the year following the reporting year. In addition, these taxes are likely to be insufficient, and the U.S. will be turning on the printing press anyway, and the procedure itself for introducing a flat tax rate could take a long time," Solomyanyi summed up.
You can read the full text of the article at Vedomosti.