Tribune. The G7 finance ministers, meeting in London on June 4 and 5, aligned themselves with the reform proposed by the American president: they agreed on the introduction of a global minimum tax on companies of 15 %. The next step will be to find a consensus among the members of the G20, then among those of the OECD, in the next two months. It is a major change that is looming.
The adoption of this reform would drastically reduce tax competition between countries with, in particular, questioning the attractiveness of tax havens. The stakes are high. For the record, the average corporate tax rate has fallen from 40% in 1980 to 25% today on a worldwide scale; the optimization practices of multinationals lead to a shortfall of around 10% of global tax revenues. It is therefore understandable that the prospect of such a reform gives rise to strong hopes, in a context where the needs for public financing are growing and inequality before tax is less and less accepted.
But these developments, largely positive, risk not making all winners if we look beyond the only rich countries.
Most developing countries have in fact granted very favorable conditions for many years to multinationals to attract their investments, with the hope of generating job creation and benefiting from technology transfers by thus inserting themselves into the process of globalization. Concretely, 80% of these countries offer total tax exemptions for a period of more than ten years.
The difficult trade-off which they face, between the need to attract investment and the need to increase their public spending, is not totally ignored by the rich countries. Since the 1950s, the latter have included a special “tax exemption” clause in a large number of tax treaties with developing countries, which ensures that any tax reduction granted locally to multinationals will not be canceled out by an increase. in their country of origin.
The impact of these clauses is considerable. On average, the amount of investment by multinationals is twice as high in developing countries where tax incentives are guaranteed by such exemption clauses (“Tax Sparing Agreements, Territorial Tax Reforms, and Foreign Direct Investment”, Céline Azémar and Dhammika Dharmapala, Journal of Public Economics, 2019). The possibility of paying little tax therefore plays a major role in their choice of location.
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