Join the UCLA Anderson Center for Global Management and UCLA School of Law’s Lowell Milken Institute for Business Law and Policy in hosting Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy and Gonzalo Freixes, associate dean and adjunct professor of accounting, law and international business for a thoughtful discussion and interactive conversation that will explore some of the impacts of a global minimum tax, and the consequences it may have for corporations and future government policy both in the U.S. and globally.
Some multinational corporations engage in tax motivated profit shifting. For example, corporations move intangible assets such as patents and intellectual property (IP) to countries with low tax rates and then report the revenues related to those assets in the low tax rate countries in order to avoid paying the higher tax rates in other countries, such as the United States, in which they are headquartered and do significant business. Some corporations are able to penetrate markets in countries in which they have no traditional presence, such as a brick and mortar store. As a result, the revenues earned in those countries in which they have only a digital presence are typically not subject to that country’s taxing authorities.
For several decades, there has been a tax competition between countries lowering their tax rates to attract foreign investment. One effect of this competition is to degrade the tax base of countries.
The Organization for Economic Co-operation and Development (OECD)/Group of 20 (G20) Inclusive Framework has developed a plan to impose a global minimum corporate tax at 15 percent. In addition, a part of the plan would reallocate certain taxing rights toward the countries in which the users or customers are located, even if the company does not have a physical presence in that country. All corporations subject to the global minimum corporate tax will pay at least 15 percent of profits in taxes. Over 135 jurisdictions representing about 95% of the world economy have agreed to this plan.
Can the plan be implemented? What changes have to be made to implement and enforce it? Will it work? Are there loopholes? Will it have the desired effect of stopping or significantly reducing tax competition? What other consequences can we expect?