French Economy and Finance Minister Bruno Le Maire attends a news conference in Paris, on Sept. 22.GONZALO FUENTES/Reuters
The world is on the brink of a global corporate tax deal but compromise is still needed over the final details, France’s finance minister said on Wednesday as countries that have been holding out begin to lay out their positions.
Some 140 countries aim to finalize the first major overhaul in a generation of the rules for taxing multinationals at a meeting on Friday so the deal can be endorsed by the Group of 20 economic powers – possibly as soon as next week.
“It is essential that everyone is fully aware that it is at this very moment that all is up for play, and that everyone needs to show a spirit of compromise on the different technical parameters that are on the table,” French Finance Minister Bruno Le Maire said at the OECD.
“We are one millimetre away from a global agreement,” Le Maire later told CNBC.
An updated draft of a global corporate tax overhaul has dropped “at least” from a proposed minimum rate of “at least 15 per cent,” possibly clearing a major hurdle for Ireland as negotiations enter a final stretch, sources familiar with the discussions told Reuters on Tuesday.
“I am hopeful Ireland can be part of supporting this new measure but we have to wait for the final text which hopefully will be available this evening,” Irish Foreign Minister Simon Coveney said.
“Ireland does not want to be isolated in this space,” Coveney told RTE radio ahead of a cabinet meeting to decide on the matter on Thursday.
The minimum rate is intended to discourage multinationals from booking profits in low tax countries regardless of where their clients are, a loophole that big U.S. tech companies have used to reduce their tax bills to next to nothing in many countries.
Some eastern European countries such as Hungary that have long used low tax rates to attract foreign investment in manufacturing have made recommendations for a significant deduction from the minimum rate based on a company’s assets and payroll in the country.
“If the other countries accept these, then there could be a compromise that would allow the introduction of the global minimum tax,” Hungarian Foreign Minister Peter Szijjarto said in a statement.
He also proposed a 10-year transition period. Le Maire said that would require compromise, but added: “why not?”
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