Latest news with #OECD
LeMonde
an hour ago
- Business
- LeMonde
Trump forces the rest of the world to exempt US companies from global tax on multinationals
Once again, the threat worked. By brandishing in recent weeks the prospect of a new tax on foreign companies – dubbed the "revenge tax" – the United States secured a major concession from other G7 countries on a tax issue that has irked Donald Trump since his return to the White House: the taxation of multinationals, and more specifically, the 15% global minimum corporate tax adopted in 2021 by 140 countries under the aegis of the Organization for Economic Cooperation and Development (OECD). Already implemented in 2024 across the European Union as well as in the United Kingdom, Canada and Japan, this tax was seen as a first step in combating unfair tax competition among states. Eager to share this American victory, US Treasury Secretary Scott Bessent announced it on Thursday, June 26, on the social network X. "After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he wrote. "(…) OECD Pillar 2 taxes [that is, the 15% global minimum tax] will not apply to US companies." Le Monde was able to confirm this information on Friday, 27 June, via both France's Ministry of Finance and the OECD, as the G7 finalized a communiqué seen by the newspaper.
Irish Times
6 hours ago
- Business
- Irish Times
‘Trump always chickens out' is starting to look more like ‘the man always gets his way'
Keeping The Donald happy is a preoccupation these days. Europe has promised to increase defence spending, with Nato head Mark Rutte buttering up the US president in a message praising his action in Iran – and later referring to 'daddy' using strong language to achieve a ceasefire between that country and Israel. And in the economic arena, US treasury secretary Scott Bessent announced late on Thursday that G7 countries had agreed to rewrite a key part of the Organisation for Economic Co-operation and Development (OECD) corporate tax deal in the face of tax threats from Washington. There is a familiar pattern here, with US threats based on political, military or economic muscle met by concessions from elsewhere. The Trump trick is to successfully move the goalposts. Just look at trade. If you had said before Donald Trump took office that the US could impose 10 per cent in additional tariffs on most imports from the European Union and meet – so far – no retaliatory action from Brussels, then that would have sounded crazy. READ MORE Now there is a fair chance that the EU will accept that these tariffs remain in place as part of EU/US trade talks now under way in return for Washington backing off more extreme threats. The narrative has been, of course, that Trump always chickens out of imposing the more extreme tariff threats. He did have to pull back on his initial 'Liberation Day' tariffs and he has done some kind of a deal with China . Market upheavals and fears of economic damage at home do stay his hand. But faced with the threat of 50 per cent tariffs on its exports to the US, the EU looks to be ready to do a deal which offers more to Washington than it does to EU capitals. Trump's madness wins over Brussels process. The pressure on the European Commission to agree a deal is growing, and there is no cast-iron guarantee that the EU can stick together. Germany , where car exports are being hit hard by a special 25 per cent tariff on this sector, is pushing hard for a quick agreement. That might suit Ireland, too; though, of course, it will depend on the terms – and particularly what is said on pharma. Dublin would prefer no additional tariffs on any exports to the US, but that does not seem likely. The other main Irish interest will be the tech sector, where there are reports of some progress as part of wider negotiations on non-tariff aspects of the EU/US deal. The last thing Ireland wants is for the big US digital tech players with bases here to be drawn into the trade battle. That said, in the 'nothing is agreed until everything is agreed' world of trade talks, we will just have to wait and see on this one. This week's agreement on tax – in which the US will drop a new part of its budget bill, section 899, which would have given it powers to impose taxes on investors and businesses from other countries operating in the US – is another sign of Europe accommodating Trump. To achieve this, the other G7 countries are offering to rewrite part of the OECD corporate tax deal. This would have allowed other countries – including Ireland – to require US companies to pay top-up taxes in their jurisdiction if they did not meet the 15 per cent minimum tax payment rule elsewhere. Agreeing the change is a notable backing down by the European members of the G7 and chips away again at the OECD corporate tax deal, painfully negotiated over many years. The EU now looks likely to give ground on the tariffs as well, at least to the extent of accepting the 10 per cent remaining in place. This may lead to some kind of an agreement by July 9th – likely one that requires more talking in the months ahead. And a falling-out between the two sides can by no means be ruled out, leading to Trump imposing higher tariffs to try to force more concessions. Were this to happen, the EU would finally have to respond with its own tariffs. And then we would be into dangerous waters. Brussels and EU capitals will try to avoid this all-out trade war. But they will only do so by agreeing a deal that gives more to Washington than it does to the EU. Talk at this week's EU summit by European Commission president Ursula von der Leyen that the bloc would go off and join an existing group of 11 Asia-Pacific countries – who have formed a trade partnership that the UK has also signed up to – is an irrelevant distraction. There is nothing wrong with diversifying trade, but this looks about as convincing a negotiating tactic as the UK's talk of doing deals with far-flung countries during the Brexit process. So the EU looks to be on the back foot. It will offer more concessions than Washington and hope that this is enough to at least extend the talks with the US, and perhaps tie down a few key areas. Ireland has escaped the worst of the tariffs so far, largely because pharma has been excluded, though other exports, including food and drink, have been hit by the additional 10 per cent charge. Continuing to avoid too much economic pain would require two things. One, obviously, is the avoidance of a trade war. Ireland will argue for the quick deal. The second is some agreement in relation to pharmaceuticals which is not too punitive. Given the scale of Irish pharma exports to the US, this is clearly the area where Ireland remains most exposed in the short term, either to tariffs being imposed or other tax or negotiated measures which mean less profit being reported here and thus less corporation tax. And in the longer term, it puts questions over the scale of US investment here, particularly to serve the American market. Having done so well over recent years, Ireland remains in the frame here. It is hard to see all this uncertainty being taken off the table all at once. Ireland will hope that the mood in the EU will mean some kind of deal before the July 9th deadline. Beyond that, more negotiations and questions will lie ahead. As we see with this weekend's fresh outbreak of trade tensions between the US and Canada, the path of negotiations with Trump is rarely straightforward. Trump has tilted the pitch in his favour and will continue to push for more. And the longer-term damage he is creating to the international economy and political relations won't worry him one bit.
Fibre2Fashion
6 hours ago
- Business
- Fibre2Fashion
OECD Pillar 2 taxes not to apply to US firms: Scott Bessent
US Treasury Secretary Scott Bessent recently indicated about a forthcoming deal among G7 nations allowing US firms to be excluded from certain taxes imposed by other nations. Around 140 nations had concluded an agreement in 2021 to tax multinational companies under the auspices of the Organisation for Economic Cooperation and Development (OECD). This deal has two pillars, the second of which sets a minimum global tax rate of 15 per cent. "After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he said in a series of posts on microblogging platform X. US Treasury Secretary Scott Bessent has indicated about a forthcoming deal among G7 nations allowing US firms to be excluded from certain taxes imposed by other nations. "After months of productive dialogue….on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests," he said on X. "OECD Pillar 2 taxes will not apply to US companies." "OECD Pillar 2 taxes will not apply to US companies," he wrote, adding that officials will work to implement the agreement across the OECD-G20 Inclusive Framework in the coming months. "Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill," Bessent added, referring to a bill currently before US lawmakers that would slash social programme spending for tax cuts. Section 899 will allow the US government to impose levies on companies with foreign owners and on investors from countries perceived to impose unfair taxes on US businesses. Fibre2Fashion News Desk (DS)
Malay Mail
12 hours ago
- Business
- Malay Mail
Poverty rising, aid falling: UN summit confronts crisis of global solidarity
PARIS, June 28 — The United Nations summit on financing for development gets underway Monday in Seville under a grim cloud: multiple conflicts, humanitarian crises and the shock disengagement of the United States. Here is an overview of the challenges development aid faces, and changes in funding fortunes: Aid in general is down Official development assistance is down for the first time in six years. The amount granted by 32 wealthy countries of the Organisation for Economic Co-operation and Development (OECD) and the European Union decreased by 7.1 per cent in real terms last year to US$212.1 billion (RM896.9 billion), according to an OECD estimate. The US remained the top contributor in 2024 with US$63.3 billion, placing them ahead of Germany with US$32.4 billion, followed by Britain (US$18 billion), Japan (US$16.8 billion) and France (US$15.4 billion). The rankings are likely to change this year after US President Donald Trump's sudden gutting of USAID, the country's main foreign development arm. That has resulted in the elimination of 83 per cent of USAID programmes, including emergency aid or healthcare access. Ukraine getting less Since Russia's invasion in 2022, Ukraine has received significant funding, partly accounted for as humanitarian or development aid. In 2023, Kyiv was the top recipient country with US$38.9 billion received from OECD members, non-OECD countries, and multilateral organisations. But in 2024, the trend was down, with aid from OECD countries alone falling 17 per cent. Africa too Africa is the region of the world that concentrates the largest portion of international aid: US$68 billion, or a quarter of the global amount for 2023. However, preliminary figures for 2024 show a decrease in OECD countries' aid to Africa (down 1 per cent) and a more pronounced decline (3 per cent) to the least developed countries — a group of about fifty nations, overwhelmingly African, considered by the UN to be the most vulnerable. Debt is rising The total external debt of the group of least developed countries has more than tripled in 15 years, according to UNCTAD, the United Nations body for integrating developing countries into the global economy. These countries now generally spend more on repaying their external debt than for their education systems. Extreme poverty spreading Extreme poverty now affects more than 800 million people, living on less than US$3 per day, according to the World Bank. After decades of progress, extreme poverty, which is primarily concentrated in sub-Saharan Africa, is on the rise again. The impact of the Covid-19 pandemic, slower growth, indebtedness, conflicts and the effects of extreme weather are the main factors behind the increase. Worsening climate risks The poorest nations also have a growing need for funding to address climate change, as 17 of the 20 countries most vulnerable to global warming are also among the least developed. These include Chad, Eritrea, Afghanistan and Haiti. However, a significant portion of the aid intended for adaptation or combating global warming is granted to the poorest in the form of loans rather than donations, exposing them to the risk of falling into a trap of 'climate debt', according to UNCTAD. — AFP
CNN
17 hours ago
- Business
- CNN
The ‘revenge tax' is dead before it even started
The Treasury Department and Congress on Thursday moved to kill a so-called revenge tax that was set to raise taxes on foreign investment and had spooked Wall Street and global business leaders. Treasury Secretary Scott Bessent on Thursday announced a deal with G7 partners that will exclude US companies from some global taxes in exchange for the US dropping Section 899 from Republican's 'One Big Beautiful Bill Act.' Bessent said in a post on X that he would ask Congress to remove Section 899 from the budget bill. Senator Mike Crapo and Rep. Jason Smith, who co-chair the joint committee on taxation, said in a statement Thursday that following Bessent's request, they would remove Section 899 from the bill. Section 899 was a tax code tucked in to President Donald Trump's budget bill that would have raised taxes on the income earned from US assets held by individuals or businesses in other countries with taxes the US perceived as unfair for American businesses. The provision would 'facilitate penalty taxes on foreign companies operating in the US if their home country is deemed to have a 'discriminatory' tax system,' analysts at Citi said in a note. The tax code was considered a 'revenge' tax because it was designed to retaliate against a global tax framework agreed upon in 2021 by the Biden administration and the Organization for Economic Cooperation and Development, according to Mark Luscombe, principal federal tax analyst at Wolters Kluwer. Former Treasury Secretary Janet Yellen had negotiated a tax agreement with other OECD countries that included setting a global minimum tax rate of 15%. Republicans had opposed the agreement and thought it was unfair, arguing it ceded authority on taxation, Luscombe said. The 'revenge tax' also was set to retaliate against digital services taxes, or taxes on US tech companies that provide services to users in other countries. Digital services taxes were perceived as 'discriminatory' by the Trump administration, said James Knightley, chief international economist at ING. Trump had previously signed an executive order on his first day in office announcing that tax deals agreed upon between the Biden administration and the OECD were null. Bessent's announcement leaves room for how the United States and other countries might negotiate on taxes. 'The Trump Administration remains vigilant against all discriminatory and extraterritorial foreign taxes applied against Americans,' Bessent said in his post on X. 'We will defend our tax sovereignty and resist efforts to create an unlevel playing field for our citizens and companies.' The so-called revenge tax, which had stirred debates on Wall Street and law firms across the Atlantic, is moot before it even went into effect. There had been back-and-forth debates in recent weeks about the implications of Section 899 and whether it would push global investors away from the United States. The provision had sent shivers up Wall Street's spine as it appeared to be another protectionist policy that would penalize global investors who put their money in the United States. 'Great concern had been expressed by Wall Street and affected stakeholders about the enactment of Section 899 and its impact on foreign investment in the United States, particularly in view of its complexity, potential scope of application and compliance obligations,' attorneys at law firm Holland & Knight said in a note. 'Those concerns have been alleviated for now.' International business groups were in Wasington in recent weeks negotiating with lawmakers. Jonathan Samford, CEO of the Global Business Alliance, which opposed Section 899, told CNN the provision would have 'squandered opportunity and more investment' and contributed to 'further isolation.' 'We're very pleased that President Trump and the administration have pursued this negotiation, and as a result, called for withdrawal of this punitive and discriminatory provision,' he said. 'I commend Chairman Smith and Chairman Crapo for focusing on making the United States the most competitive it can be.' Republicans this week had begun hinting that Section 899 might be negotiable. Director of the National Economic Council Kevin Hassett said in an interview with Fox Business on Wednesday that Section 899 might not be included in the final budget bill. 'You can try to retaliate, but it's probably better to work out an agreement than just have a tax fight, just like we're having tariff fights,' Luscombe said.
