Plan to implement tax floor of 15%
June 7, 2021 - A landmark deal by the Group of Seven nations will see a global minimum corporate tax of at least 15 per cent and changes to ensure that some of the world’s biggest companies pay their taxes.
A study from Bloomberg estimates that no major tech company is paying effective tax rates as high as the U.S. statutory rate of 21 per cent. For a company like Nvidia Corp., which paid an effective tax rate of 2.63 per cent over the most recent 12-month period, news that the world’s largest economies are planning to implement a tax floor of 15 per cent will represent a substantial hit to future earnings.
Facebook, Amazon, Microsoft, Nike and Apple all paid effective tax rates below 21 per cent, with tax paid as a percentage of pre-tax income of 12.2, 13.8, 14.0, 14.4 and 14.9 per cent respectively.
The G7 agreement feeds into a much broader, existing effort. The Organization for Economic Cooperation and Development has been coordinating tax negotiations among 140 countries for years on rules for taxing cross-border digital services and curbing tax base erosion, including a global corporate minimum tax.