USA put pressure, China stonewall: minimum tax would help Germany

USA put pressure, China stonewall: minimum tax would help Germany

The US is putting pressure on, China is stonewalling

Minimum tax would help Germany

It remains to be seen whether a global corporate tax will actually end up as the G7 recently decided. The Federal Ministry of Finance has already determined that the German treasury should benefit from the reform. The plan would also have consequences for many companies.

Based on the available studies, the Federal Ministry of Finance expects the planned global tax reform to have a positive effect for Germany. A “moderately positive fiscal impact” can be assumed, according to a response from the Federal Ministry of Finance this week to parliamentary questions from several parliamentary groups in the Bundestag. According to the ministry, the minimum tax of 15 percent planned by the seven leading industrial nations (G7) has a realistic chance of being accepted worldwide.

It was stressed that it would be an effective taxation. “So it is not only a question of the tax rate, but a global agreement on the tax base is also sought,” says the letter, which is available to the Reuters news agency. “This would for the first time prevent companies from being able to de facto reduce their actual tax burden even with higher nominal tax rates.”

The G7 countries recently agreed on a basic framework for the tax reform. The heart of this is the global minimum tax of 15 percent. There is also a new regulation that countries with huge consumer markets should receive a larger share of the tax pie from particularly large and profitable corporations. Many detailed questions are still open. July should show whether the G7 agreement will last on a larger scale and whether it will be binding for almost 140 countries in the next few years.

In the background, there is currently resistance from countries that attract companies with particularly low tax rates. But according to insiders, China has not yet been convinced either. Experts assume that these countries could enforce exceptions. But the US wants to prevent that. US Treasury Secretary Janet Yellen recently said that with the United States there would be no exceptions for China or any other country. “We want this to work and not be looped about.”

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Author: Killian Jones
Graduated From Princeton University.He has been at the USTV since 2017.
Function: Chief-Editor

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