Over the weekend, the G7 finance ministers reached a landmark agreement on corporate tax, with the seven nations passing a minimum rate of 15%. The deal comes after an Irish subsidiary of Microsoft emerged
Reports like these added additional momentum to the G7 negotiations and the agreement means that companies will have to pay a minimum tax rate of 15%, regardless of where they are based. It will also aim to close tax loopholes, forcing some of the biggest multinationals and tech giants like Amazon, Facebook and Microsoft to pay taxes where their goods and services are sold, regardless of whether they are physically present in certain countries. The OECD estimates that the proposals will generate between $ 50 and $ 80 billion a year in tax revenue, although the final sum will largely depend on the final status of the deal.
French Finance Minister Bruno Le Maire described the weekend’s events as “a starting point” and promised that “in the coming months we will fight to ensure that this minimum corporate tax rate is as high as possible.” While the G7 reached an agreement, it will have to garner support among the G20 nations that are scheduled to meet in Venice next month, while the broader negotiations will involve 139 countries. So, considering the severity and implications of the deal for both multinationals and tax havens, what do corporate tax rates look like in developed countries in 2021?
Like the following infographic based on OECD data (showing the central government’s basic statutory corporate tax rate) illustrates that Ireland’s infamously low corporate tax rate is still 12.5%, well below the threshold agreed by the G7 over the weekend. In the United States, corporate tax was lowered from 35% to 21% in 2018, although President Biden suggested increasing it to 28%. He recently offered to drop those proposals and maintain a minimum tax rate of 15% in exchange for Republican support to finalize his infrastructure deal. Elsewhere in the OECD, the French corporate tax rate stands at 28.4% in 2021, while the UK rate is 19%.
* Click below to enlarge (represented by Statista)