The trade, investment and tax cooperation task force of the T20 Argentina team, part of the Argentine G20 presidency, has called for action from G20 leaders to prevent international tax competition becoming ‘a ruinous race to the bottom’.
The group believes the US tax reforms of December 2017 could push other G20 governments to react by:
introducing preferential tax regimes, distorting investment incentives; and
growing budgetary deficits which hinder growth in the medium term.
Competition of this type in corporate taxes could affect the tax base of industrialised countries, while developing countries may come under pressure to raise indirect taxes on consumers.
The report, ‘Tax competition’, proposes that G20 governments:
agree on a minimum corporate tax rate;
deepen cooperation in exchanging of tax-related information and the fight against BEPS;
improve the transparency of tax instruments for the attraction of investments;
work towards a common corporate tax base (CCTB) and explore ways to treat multinationals as single entities; and
promote the use of new technologies, such as blockchain, to fight trade mis-pricing and mis-invoicing.
‘A common minimum corporate tax rate would stop rewarding tax havens and prevent a race to the bottom, while keeping G20-based multinational companies, as well as other companies and permanent establishments operating in G20 countries, on a level-playing field with competitors’, the report states.
Corporate tax rates above the minimum level ‘would remain subject to the national tax rules’.
The report goes on to say that, after closer cooperation on BEPS and agreeing on a CCTB: ‘a third, longer-term measure, introducing a common consolidated corporate tax base (CCCTB) with broad international applicability would be an adequate approach to taxing the globalised and digitalised world economy’.
The trade, investment and tax cooperation task force of the T20 Argentina team, part of the Argentine G20 presidency, has called for action from G20 leaders to prevent international tax competition becoming ‘a ruinous race to the bottom’.
The group believes the US tax reforms of December 2017 could push other G20 governments to react by:
introducing preferential tax regimes, distorting investment incentives; and
growing budgetary deficits which hinder growth in the medium term.
Competition of this type in corporate taxes could affect the tax base of industrialised countries, while developing countries may come under pressure to raise indirect taxes on consumers.
The report, ‘Tax competition’, proposes that G20 governments:
agree on a minimum corporate tax rate;
deepen cooperation in exchanging of tax-related information and the fight against BEPS;
improve the transparency of tax instruments for the attraction of investments;
work towards a common corporate tax base (CCTB) and explore ways to treat multinationals as single entities; and
promote the use of new technologies, such as blockchain, to fight trade mis-pricing and mis-invoicing.
‘A common minimum corporate tax rate would stop rewarding tax havens and prevent a race to the bottom, while keeping G20-based multinational companies, as well as other companies and permanent establishments operating in G20 countries, on a level-playing field with competitors’, the report states.
Corporate tax rates above the minimum level ‘would remain subject to the national tax rules’.
The report goes on to say that, after closer cooperation on BEPS and agreeing on a CCTB: ‘a third, longer-term measure, introducing a common consolidated corporate tax base (CCCTB) with broad international applicability would be an adequate approach to taxing the globalised and digitalised world economy’.
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