The Biden administration’s statements on the taxation of multinationals go back several years. We are in September 2013. The subprime crisis was just behind and the world was struggling out of a recession. Money was needed to revive the global economy, but the public coffers were empty.
It is in this context that the G20 meeting in summit in Saint Petersburg decided to reform the taxation of companies, which obviously took advantage of loopholes in national laws to pay as little tax as possible. In particular by negotiating tax rebates with the States, or by practicing the transfer price, which allowed the subsidiaries to reduce the tax base. Another objective of the G20: to eliminate aggressive tax regimes in order to avoid competition between countries to attract multinationals.
The G20 had given the Organization for Economic Co-operation and Development (OECD) a mandate to negotiate an agreement. The mission is still not accomplished. In 2019, the heads of state again instructed the OECD to make proposals on the taxation of digital companies, Google, Apple, Amazon or even Facebook, which generated billions in profits, but paid few taxes. In the United States, the giant Amazon paid its taxes for the first time in its existence last year on the accounts of 2019: 162 million dollars on a taxable income of 13.9 billion. Or 1.2%.
Large-scale tax evasion
It must be said that, during the past four years, international cooperation on corporate taxation has been largely undermined by a Trump administration which was rather inclined to lower taxes. Thus, in December 2019, the United States reduced the tax rate from 35 to 21%.
It is against this backdrop that the commitment of the new US administration to minimum global corporate taxation is boosting the work of the OECD. Janet Yellen is hoping for a deal again this year.
The Secretary of State for the Treasury has already received strong support. There is something. Because “States are faced with large-scale tax evasion and the transfer of money to tax havens”. This statement is not that of an activist militant against multinationals: it was made Tuesday by Gita Gopinath, the chief economist of the International Monetary Fund. His words corroborate those of the Tax Justice Network, a network specializing in taxation, which claims that corporate tax evasion totaled $ 245 billion in 2016. It is high time to act.