President Biden has proposed a global tax on business to ensure everyone pays their fair share
— 1 minute read — by Sam Feierabend
Joe Biden has proposed a global tax on large corporations that, if passed, will have large scale repercussions on existing ‘tax havens’.
The proposal would see companies taxed on where they earn their revenues, rather than where they record their profits – something that would kill tax havens and see multinational companies pay a larger share of tax. This would also coincide with an introduction of a global minimum tax rate, decided by the world’s biggest economies.
The coronavirus pandemic has driven national debts to eye-watering levels meaning that the debt has to be paid off somehow. The global public have also become vocal in their displeasure at large companies avoiding tax, calling for them to pay their fair share. U.S. multinational companies are some of the worst offenders for this, with gross profits shifted to offshore havens estimated to be between 25 and 30 percent in the last decade.
Biden’s initial global tax would be estimated around 21 percent, but an agreement would be difficult in other developed economies such as the EU, where tax on companies varies from as low as 9 percent in Hungary to 3 percent in France.
The proposal by President Biden is an encouraging step toward the global issue of tax avoidance. However, with various large companies that would be affected by this holding political power globally, the discussion over the proposal will be difficult and take time to bring to fruition.