France pushes for 25% target for taxing multinationals’ super-profits

Italian European Commissioner for Economy and Finance Paolo Gentiloni (C) arrives at the Arsenale complex for the G20 Finance Ministers and Central Bank Governors Meeting in Venice, northeastern Italy, 9 July 2021. [EPA-EFE/ANDREA MEROLA]

Countries should be able to tax a quarter of big multinationals’ profits no matter where they are earned, France proposed on Saturday (10 July) at a G20 finance ministers meeting in Venice focused on overhauling the rules for cross-border corporate taxation.

Key details remain to be hammered out after G20 finance chiefs formally endorsed the outline of plans that would make new rules for where multinationals get taxed and set a global minimum corporate tax rate of 15%.

Global tax reform plan goes to the G20

G20 finance ministers meeting in Venice on Friday and Saturday (9-10 July) could rally the world’s top economies behind a global plan to tax multinationals more fairly, already hashed out among 130 countries representing 90% of world output.

The emergence of digital commerce has made it possible for big tech firms to book profits in low-tax countries regardless where they money is earned.

The rules, to be finalised at a Rome summit in October, would allow countries where revenues are earned to tax 20-30% of a big multinational’s excess profit – defined as profit in excess of 10% of revenue.

Developing countries, such as Brazil, have been pushing for a higher share, EU Economics Commissioner Paolo Gentiloni said at the meeting.

“I think that the best solution would be a level of allocation of profit of 25% to meet the concerns of some developing countries which are legitimate concerns,” French Finance Minister Bruno Le Maire told reporters.

Companies considered in scope for the new rules would be multinationals with global turnover above €20 billion, although the turnover threshold could come down to €10 billion after seven years following a review.

Gentiloni said some countries were pushing for the 10 billion threshold while others wanted to exclude some industrial sectors from the scope of the new rules, in addition to financial services and mining industries which are already exempt.

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