PARIS (AFP) – The Group of Seven (G7) wealthy nations may have endorsed a plan to ensure the world’s biggest companies pay a minimum global tax rate, but United States (US) tech behemoth Amazon may escape it.
The landmark deal is supposed to help put an end to top multinationals shopping for countries with low corporate tax rates in which to book their profits instead of paying where they conduct their business. By introducing a minimum tax rate of 15 per cent without exceptions proponents of the plan hope multinationals will have less incentive to go through complex efforts to shift where they pay taxes.
There is a second “pillar” in the plan: countries would be allowed to tax a share of the profits of the most profitable companies in the world, regardless of where they are based.
The caveat: it applies only to companies whose profit margins exceed 10 per cent.
That would affect about 100 companies, including US tech giants such as Facebook and Google, but as some experts have pointed out, not Amazon, as its profit margin last year amounted to just 6.3 per cent.