The OECD estimates the proposed global minimum tax will generate $150 billion in additional global tax revenues annually. Michael Hewson, founder and director of Graphene Economics, a specialist African transfer pricing advisory firm, suggests that this may not benefit developing countries as much as developed countries.
The Organisation for Economic Co-operation and Development estimates the proposed global minimum tax will generate $150 billion in additional global tax revenues annually. Michael Hewson, founder and director of Graphene Economics, a specialist African transfer pricing advisory firm, suggests that this may not benefit developing countries as much as developed countries.
As prof. Adrian Saville noted, speaking at an event on global minimum tax and new taxing rights in SA at the Gordon Institute of Business Science earlier this week: “In this world of inflation, cost of living crisis, inequality, the evaporation of economic growth, and fiscal strain the matter of taxation is a critical conversation.”
“We need to consider what we stand to lose, in exchange for limited potential benefit,” he said. “This may explain why only 23 African countries have signed the deal to date. We need further impact assessment, urgently.” The objective of Pillar One is new taxing rights over multinational enterprises regardless of physical presence. It will apply to multinationals with a global turnover above 20 billion euros and with a profit margin above 10%.
“It will affect companies whether they’re above the threshold or down the line, even those that that are not in those above those thresholds. In addition, countries, particularly those in Africa, need to consider the impact of these proposals on the income tax incentive programmes, especially if these programmes have the potential to reduce the effective tax rate paid in a country to below 15%.
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