Global corporate tax levels in perspective [Infographic]

This weekend, G7 finance ministers reached a historic deal on corporation tax, with all seven nations endorsing a minimum rate of 15%. The deal comes after it emerged that an Irish subsidiary of Microsoft

MSFT
raked in $315 billion in profits last year but paid no tax because he is “resident” in Bermuda for tax purposes. Microsoft Round Island One’s gargantuan profit is equivalent to almost three-quarters of Ireland’s GDP and it doesn’t even have employees. Such practices have become commonplace and in May, for example, Amazon

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recorded a turnover of 44 billion euros for the previous year in Europe. Even though the figure represents record sales, documents filed by the company in Luxembourg revealed that its unit there had in fact suffered a loss of 1.2 billion euros and therefore had not paid any tax. on companies.

Reports like these have given added impetus to the G7 negotiations and the agreement means that companies will have to pay a minimum tax rate of 15%, regardless of where they locate their headquarters. It will also aim to close tax loopholes, forcing some of the biggest multinationals and tech giants such as Amazon, Facebook and Microsoft to pay taxes where their goods and services are sold, whether they are physically present or not. in some countries. The OECD estimates that the proposals will generate between $50 billion and $80 billion a year in tax revenue, although the final sum depends heavily on the final state of the agreement.

French Finance Minister Bruno Le Maire called the weekend’s events a “starting point” and promised that “in the months to come, we will fight for this minimum corporate tax rate to be the as high as possible”. As the G7 has reached an agreement, it will need to muster support from the G20 countries due to meet in Venice next month, while wider negotiations will involve 139 countries. So, given the seriousness and implications of the deal for multinationals and tax havens, what will corporate tax rates look like in developed countries in 2021?

As illustrated in the following infographic based on OECD data (showing the central government’s basic statutory corporate income tax rate), Ireland’s infamously low corporate tax rate is still 12.5%, well below the threshold agreed by the G7 this weekend. In the United States, corporation tax was lowered from 35% to 21% in 2018, although President Biden suggested raising it to 28%. He recently offered to drop those proposals and keep a minimum tax rate of 15% in exchange for Republican support to get his infrastructure deal done. Elsewhere in the OECD, France’s corporate tax rate stands at 28.4% in 2021, while the UK rate is 19%.

*Click below to enlarge (graphic by Statistical)