[Global] President Biden’s global tax rate plans could make the world fairer

It has been more than a decade since any progress was made towards bringing the global tax system into the modern age. Yet less than three months after taking office, President Joe Biden has raised hopes of a breakthrough; his proposals could destroy tax havens and force multinationals to pay a fairer share of tax, The Guardian reports.

Under proposals submitted to tax negotiators from 135 countries at the OECD (Organisation for Economic Co-operation and Development), the Biden plan would force big companies to pay taxes in the territories where their revenues are earned rather than where the profits can be moved to. It would also establish a global minimum tax rate, agreed by the world’s biggest economies.

This is a significant development after decades of big companies charting their own course around the disjointed mess of international tax rules and advised on where to land to reduce their bills by a battalion of lawyers and accountants.

The free-market economists favoured by previous presidents would have touted the advantages of globalisation; cheaper products and more choice. However, profit-shifting by big companies - exacerbated by the ease of doing business across borders in the digital age - has hit government coffers hard. According to the Tax Justice Network, the sums lost to exchequers around the world have risen as high as £311bn annually. (Link via original reporting)

This shift comes at a time when the impact of the COVID-19 pandemic is forcing national debts to skyrocket. Since 2008’s financial crisis, public anger about tax avoidance has led to increased calls for companies to pay their fair share.

US multinationals are reportedly among the worst offenders. The proportion of gross profits they shift into tax havens has leapt from 5-10 per cent in the 1990s to between 25 per cent and 30 per cent today. The Guardian explores the story in further detail.

It has been more than a decade since any progress was made towards bringing the global tax system into the modern age. Yet less than three months after taking office, President Joe Biden has raised hopes of a breakthrough; his proposals could destroy tax havens and force multinationals to pay a fairer share of tax, The Guardian reports.

Under proposals submitted to tax negotiators from 135 countries at the OECD (Organisation for Economic Co-operation and Development), the Biden plan would force big companies to pay taxes in the territories where their revenues are earned rather than where the profits can be moved to. It would also establish a global minimum tax rate, agreed by the world’s biggest economies.

This is a significant development after decades of big companies charting their own course around the disjointed mess of international tax rules and advised on where to land to reduce their bills by a battalion of lawyers and accountants.

The free-market economists favoured by previous presidents would have touted the advantages of globalisation; cheaper products and more choice. However, profit-shifting by big companies - exacerbated by the ease of doing business across borders in the digital age - has hit government coffers hard. According to the Tax Justice Network, the sums lost to exchequers around the world have risen as high as £311bn annually. (Link via original reporting)

This shift comes at a time when the impact of the COVID-19 pandemic is forcing national debts to skyrocket. Since 2008’s financial crisis, public anger about tax avoidance has led to increased calls for companies to pay their fair share.

US multinationals are reportedly among the worst offenders. The proportion of gross profits they shift into tax havens has leapt from 5-10 per cent in the 1990s to between 25 per cent and 30 per cent today. The Guardian explores the story in further detail.