Latest news with #USmultinationals
CNA
2 days ago
- Business
- CNA
Canada U-turn leaves Europe in the lurch on US tech taxes
PARIS: Canada's dropping of a tax on US tech giants under the pressure of Donald Trump is fuelling concern about the future of such levies in other countries, particularly in Europe. "Currently, about half of all European OECD countries have either announced, proposed, or implemented" a digital services tax pending global action, said the Tax Foundation, a think tank which supports the introduction of such taxes. But the future of such measures is unclear after the Group of Seven nations agreed Saturday (Jun 28) to exempt US multinational companies from a global minimum tax imposed by other countries. The move sparked a pointed reaction from Nobel Prize-winning economist Joseph Stiglitz. "This is about more than trade - it's about whether democratically elected governments can regulate and tax powerful corporations or whether tech billionaires can dictate policy through political proxies," he said. WHO HAS IMPOSED SUCH A TAX? Austria, Brazil, Britain, France, India, Italy, Spain and Türkiye are a dozen large countries which have imposed or plan to impose special taxes on big tech firms. The objective is to force them to pay taxes where they carry out business, as well as to counter the tax optimisation strategies they often practice. Generally, the taxes target sales revenue and focus essentially on US firms like Alphabet (Google), Amazon, Apple, Facebook (Meta) and Microsoft. But they differ from one country to another in terms of sales that are taxed, with some targeting advertising revenue and others targeting sales of data. "Most of the proposed or adopted rates are in the 2-5 per cent range," of the revenue stream targeted, according to analysts at the Canadian Tax Foundation. Most nations adopted the taxes pending a global agreement which would see multinational companies pay some taxes in countries where they operate, but the prospects for such a deal now look bleak. WHAT THESE TAXES GENERATE The taxes tend to raise more money year after year, according to the latest data from the EU Tax Observatory, which dates from June 2023. Britain, France, India, Italy and Türkiye have seen steady increases in the revenue their taxes generate. Both Britain and France raised approximately US$1.1 billion last year via their digital services taxes. Italy saw its revenue from the tax jump by 90 per cent from 2021 to over $530 million last year, according to local media. But Spain, which hoped to raise more than a billion per year via its tax, only raised around US$350 million in 2023, according to La Vanguardia daily. OTHER DOMINOES TO FALL? Before Canada, India had already halted in April its six per cent tax on online advertising by foreign firms against the background of trade talks with the United States. The taxes may fall elsewhere. While Britain has reached a trade deal with the United States to avoid the worst tariffs, it wants to go further and has refused to rule out a modification or elimination of its digital services tax. EU nations so far haven't indicated that the tax is on the table. A German government spokesman said Monday that Canada's dropping its tech tax had "absolutely no bearing" on Berlin's position as it considers it considers its tax policies. But worries remain. National digital service taxes are "vulnerable to economic and political threats - particularly from the US, which has historically protected its digital multinationals from fair taxation abroad," said the Tax Justice Network, a coalition of researchers and activists.
BreakingNews.ie
10-06-2025
- Business
- BreakingNews.ie
Corporate tax set for further short-term boost, fiscal watchdog says
Booming corporate tax receipts could grow further in 2025 and 2026, even as the threat of potentially damaging tariffs hangs over the volatile source of revenue, the State's independent fiscal watchdog said on Tuesday. A six-fold jump in corporate tax revenue since 2014 to €28 billion last year, or 29 per cent of all tax collected – even before an extra €11 billion of Apple back taxes is included – has handed the Republic one of Europe's healthiest public finances. Advertisement While the Department of Finance expects the taxes that are mostly paid by US multinationals to fall by 2 per cent this year and return to 2024 levels in 2026, the Irish Fiscal Advisory Council (IFAC) sees four factors why they could, instead, increase. Firstly, it said the department's estimate that global tax reforms agreed five years ago would reduce corporate tax revenue by €2 billion a year from 2026 was not credible and that they will likely add around €3 billion from 2026. The first part of the OECD-led reforms that the Government expected to divert corporate tax receipts to other countries has not been implemented, whereas the State has been forced to increase its low corporate tax rate to 15 per cent from 12.5 per cent for larger companies. IFAC said that many of the main corporate taxpayers – based in the technology and pharmaceutical sectors – were not currently impacted by US tariffs and expected their global profits to increase this year. Advertisement Ireland Which counties pay the most in taxes and which sec... Read More A 154 per cent year-on-year jump in Irish pharmaceutical exports in the first quarter, as some US drugmakers with Irish plants reported stocking up ahead of threatened tariffs, may separately lead to higher corporate tax payments this year, IFAC said. Finally, the exhaustion of capital allowances some firms used when they moved valuable intellectual property assets to Ireland could potentially add "billions" of euros more in corporate tax in the coming years, IFAC chair Seamus Coffey added. Mr Coffey said IFAC did not see any downside risks to the tax take in the short term, based on broad macroeconomic trends and the current tariff regime. "We don't see it but it doesn't mean it's not there. That's down to the profitability and decisions these companies make," Mr Coffey told a news conference.
