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How will the global corporate tax deal impact tech companies?
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Will the OECD-brokered global corporate tax deal make a difference?
Well, it should, at least in two years, once it is adopted by the 136 countries that have now agreed to it. Once enforced, a minimum contribution would see approximately $125 billion flowing to public purses where it doesn't today. It would make it harder for countries to be tax havens or to be part of this race to the bottom when it comes to tax rates. It puts a limit on competition between countries but that is still possible. Now, public scrutiny over the corporate sector has intensified over the past years and with a whole host of issues like health care, climate change, and infrastructure begging for better solutions, there is a need for fair taxation that is widely supported, both publicly and now also politically.
Will tech companies finally start paying their fair share?
Well, they would be part of this treaty once it is in place, but in the meantime, there is actually a two-year ban on tax levies. The US negotiated that because if you recall, there were French proposals to tax US tech giants over their European income and profits and those almost led to a trade war between the two allies. So, most likely this OECD tax treaty will go over much more smoothly. Already, the historic agreement by the OECD and G20 countries is a much-needed sign of hope.
What We're Watching: A year since George Floyd, G7 corporate tax, Samoa's political crisis
Marking a year since George Floyd's murder: May 25 marks one year since the killing of George Floyd in Minneapolis, which galvanized the biggest anti-racism movement in America in generations – and inspired a global reckoning with racial inequality and policing in dozens of countries around the world. Since then, former police officer Derek Chauvin has been charged with Floyd's murder, a historic development after decades of near-total impunity for police who use excessive force against Black Americans. But many say that Chauvin's' conviction is not enough and are calling for the passage of broad police reform legislation in the US Congress. While the House of Representatives passed the George Floyd Police Reform Act, the bill in its current form doesn't appear to have sufficient support to pass in the Senate. One of the biggest sticking points in the bill is over "qualified immunity," which protects government officials and law enforcement from being held personally liable for constitutional violations. Republicans oppose this structural reform, but even if they come to an agreement in the Senate, progressive House Democrats say they will not accept a watered-down version that does not eliminate this provision in at least some instances. Meanwhile, President Biden will host the Floyd family at the White House on Tuesday.
G7 to finalize global corporate tax: The G7 – a group of large economies including the US, Canada, the UK, France, Germany, Italy, and Japan – is close to finalizing global taxation rules for the world's largest companies. For years, big European nations, frustrated with American behemoths like Starbucks, Amazon, and Google that flood their markets with products yet pay almost nothing back to their governments, have been pushing for a similar global corporate tax rate, something the US has long resisted. But as countering domestic tax avoidance has emerged as a Biden administration priority, Washington is now on board with the idea. The US has called for a 15 percent minimum global tax, lower than the 21 percent backed by several European states. While the G7 agreement would not be globally enforceable, it would be a powerful first step in paving the way to formalization of a global minimum tax rate currently being negotiated in Paris at the OECD, an organization made up of 37 advanced economies. However, while the G7 could finalize a deal for taxing big corporations in the next few weeks, it could still take many months before the broader G20, which is running the talks in Paris, seals a deal, given resistance from countries with low corporate tax rates like Ireland, which has greatly benefited from operating as a tax haven for multinationals to protect their profits.
Is a coup happening in Samoa? The Pacific Island nation of Samoa held elections in early April, and things have been a mess since. The results gave a razor thin, one-seat majority to the Faith in the One True God (FAST) party, which would have ended nearly four decades of rule by the governing Human Rights Protection Party (HRPP). But just before FAST leader Fiame Naomi Mata'afa was set to be sworn in on Monday — as Samoa's first female prime minister, no less — the HRPP government cancelled the required parliamentary session, in a move that the Supreme Court swiftly called "unlawful." Undaunted, FAST held its own swearing-in ceremony for Mata'afa, in a tent. But since that was not done in accordance with the constitution, it's not clear who really runs the country now or what consequences the current PM Tuilaepa Sailele Malielegaoi may face for flouting the country's highest court. This is the first major constitutional crisis of its kind since Samoa gained independence from New Zealand in 1962.