Saturday, October 01, 2022

Outcome of major OECD corporate Tax Reform is Uncertain

Recommendable! This OECD tax reform seems to be a globalist monstrosity! Government greed knows no bounds!

Tax competition among countries is very important to keep government greed and Big Government in check!

This Big Government agenda also includes redistribution of corporate profits among countries!

What is the euphemism used here: tax harmonization!

The targeting of large corporations for their allegedly tax evading maneuvers across borders is one of those favorite political games!

The most prominent component is the uniform 15% corporate tax rate! It is supposed to eliminate or significantly reduce tax competition among countries. However, this is almost doomed to failure, e.g. there are too many countries and the incentives for individual countries to circumvent are too high.

Any economist knows that the tax rate is the least important aspect of a tax system. Much more important is how is income defined and how are tax laws enforced etc.

"The OECD tax reform could be seen as the final act of efforts to harmonize international corporate taxation. Just a few years ago, there was a consensus that key challenges such as the taxation of digital companies with no presence in a country should be addressed within the existing system. Now the OECD, with the cooperation of the G20, is preparing to create an entirely new tax code. This restructuring primarily favors large countries, for example by classifying tax competition between countries as fundamentally harmful. ...
However, the agreement reached by nearly 140 states in July 2021 disguises numerous practical problems that are already creating uncertainty, even before it enters into force. For example, the implementation of the so-called Pillar One has stalled seriously. Under this pillar, profits are to be redistributed to countries that don’t have the right to tax these profits under current tax standards. ...
Behind closed doors, there is already speculation about whether Pillar 1 will ever be implemented ‒ not least because the fate of the multilateral agreement in the USA is uncertain. An agreement without the US, the most important country of domicile for large digital companies, is pointless."

Outcome of OECD Tax Reform Uncertain - Avenir Suisse Arguments for streamlined implementation without government policy experimentation

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