Latest news with #multinationals
ABC News
18 hours ago
- Business
- ABC News
Tech billionaires to reap the rewards of Trump's strongarm tax tactics
The world's richest are about to get a whole lot richer. Donald Trump has just engineered a spectacularly lucrative arrangement for his big technology backers, the "broligarchs" who backed his run to the White House. While most of the world has been focused on tariffs and the potential havoc they could wreak, it was another T word that dominated the American president's strategy to reward his biggest supporters. Tax. For close to 20 years, the Organisation of Economic Co-operation and Development has been diligently working on a plan to ensure multinational firms pay their fair share of tax in the countries in which they operate. A little over 18 months ago, they finally secured an agreement from members at a meeting in Singapore. The plan, endorsed by the Biden administration, was that all multinationals would pay a minimum of 15 per cent tax. It didn't seem too onerous an impost. Australia, a primary force in the movement for more than a decade, formally signed the proposal into legislation just before Christmas last year. That's now out the window. As part of an agreement reached on Friday our time, the US will junk its planned "retaliatory tax" on nations it deems unfriendly to American corporations. The quid pro quo? The G7 nations — and most other countries as a result — should tear up their plans to tax American multinationals. It went largely unnoticed during the presidential inauguration back in January. Within hours of his long and rambling speech, the new president signed an executive order announcing America's withdrawal from the OECD initiative to standardise global corporate tax rates and limit tax avoidance. The writing was on the wall. Suddenly, it all became clear at the extent of the power of the four figures — Elon Musk, Jeff Bezos, Mark Zuckerberg and Sundar Pichai — nestled up behind the new president at the podium seated in prime position in line with his new cabinet, and all looking as though they'd just eaten the canary. United by a common goal, enriching themselves, it was a statement about power, influence and American hegemony. Less than six months in and Donald Trump has delivered for them in spades. Multinational tax avoidance has always been a problem, particularly in resource rich countries like Australia. But in recent years, it has reached new heights as the big technology companies have turned it into an art form. The traditional standard bearer for tax avoidance Down Under was oil giant Chevron. Back in 2021, the oil giant paid $30 in tax. Yes, you read that correctly. $30. That was on revenue of $9.2 billion and, even then, it wasn't happy, arguing it shouldn't have to pay anything as it lost $1.8 billion that financial year. A subsequent clampdown by the Australian Tax Office saw it cough up a couple of billion in tax the next year. That followed years of legal action between the company and the ATO over its reluctance to pay tax which Chevron finally abandoned in 2018. Like many multinationals, Chevron shifted its profits offshore by borrowing money from a Chevron entity at punishing rates of interest, then claiming that as a tax deduction. The big tech companies employed a more sophisticated model. Aided by the fact that they manufactured different components in different countries, if they manufactured anything at all, and sold their wares across the globe, it was easy to justify operating out of low taxing destinations where profits could be shovelled. One way was to establish a marketing firm in a low taxing country, that charged related companies in other parts of the global network exorbitant fees. Or there was the preferred strategy of establishing a firm that owned the intellectual property in a tax haven, which then charged its cousins in high taxing countries exorbitant fees for using technology derived from the US parent. For years, the Australian arms of the big tech outfits generated massive revenue streams but made little profit here and, hence, paid hardly any tax. In many cases, most of the money was shunted off to Ireland. Amazon, for instance, in 2018 notched up sales here of more than $1 billion but paid just $20 million in tax. It since has begun paying substantially higher tax payments but continued to book huge amounts of Australian revenue through Singapore. If President Trump's executive order was manna from heaven for the broligarchs, this week's agreement for G7 nations to abandon the 15 per cent minimum tax has been a gift from God. Trump loves to insert the word "deal" into almost every sentence and on Friday his Treasury Secretary Scott Bessent was channelling his boss on Elon Musk's X. "President Trump paved the way for this historic achievement. On January 20, the President issued two Executive Orders instructing Treasury to defend US tax sovereignty, and as a result of President Trump's leadership we now have a great deal for the American people." How did Bessent manage to convince the G7 to abandon years of toil on a standardised global corporate tax rate? Some might call it negotiation. Others may see it as coercion. It involves America abandoning a little heard about clause in Trump's Big Beautiful Bill, the big spending, tax cutting bill that threatens to blow out America's budget deficit. Section 899 from that bill was penned as a new line of attack on what the president deems to be unfriendly nations. It deals with "retaliatory taxation". Companies and investors from "discriminatory foreign countries" buying or investing in the US could be slugged with escalating increases in US federal income tax and withholding tax. The tax penalty would rise by up to 5 per cent a year to a maximum of 20 percentage points above existing treaty rates. While that all sounds a little esoteric, it put Australian super funds and big corporations into a mild state of panic. Our super funds have roughly $400 billion invested in the US, most of it on Wall Street and much of it in America's big tech firms. The prospect of increased taxes would thwart those returns into the future and damage the retirement incomes for Australians. While it delivered a mighty big stick for Trump in any negotiations with Australia, it wasn't without dangers for him at home. US investment firms, already worried about the exodus of global capital from US markets, were becoming increasingly concerned that if the new tax was ever enacted, it could ultimately cause a run on US government bonds and cause a credit crisis. That crisis has been averted for now. But it has come at the expense of America's reputation and role as the moral standard-bearer in the global economy.
News.com.au
a day ago
- Business
- News.com.au
Aussie Super sector breathes sigh of relief after Trump administration axes ‘revenge' tax
Australia's Super sector has breathed a sigh of relief after the Trump administration walked back a proposed 'revenge' tax for foreign investors, which would have wiped billions of dollars. US Treasury Secretary Scott Bessent confirmed overnight he struck a deal with countries tightening taxes on multinationals 'that defends American interests'. Under the international taxation rules agreed by 140 governments, including the former Biden administration, multinational companies would pay a minimum 15 per cent tax regardless of where their global headquarters are. On his first day as president, Donald Trump withdrew the US from the agreement and threatened retaliatory duties on any country that imposed the minimum multinational tax. 'After months of productive dialogue with other countries on the (Organisation for Economic Co-operation and Development) Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests,' Mr Bessent posted on social media. 'OECD Pillar 2 taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.' He added that he 'asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill'. Had a deal not been reached, nearly half a trillion US dollars in Australian super investments could have been impacted. 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. President Trump paved the way for this historic achievement. On January 20, the President issued two… — Treasury Secretary Scott Bessent (@SecScottBessent) June 26, 2025 The Association of Superannuation Funds of Australia (ASFA) said on Friday it was 'a really welcome step from the US Treasury Secretary'. 'There's still a way to go – the amendments need to be made by lawmakers,' chief policy officer James Koval said. 'There are a number of other amendments under consideration. 'This section of the legislation would have changed the risk return profile of investment in the US, which would have been a poor outcome for all involved. 'The superannuation sector has around USD$450 billion invested in the United States, the single largest market outside of Australia. 'This is money invested in US infrastructure, equities, bonds, and other areas.' Anthony Albanese earlier also welcomed the update, saying he raised Australia's concerns with Mr Bessent on the sidelines of the G7 Summit in Canada last week. 'This would adversely impacted on Australian investment if it had have been implemented, particularly on investment from superannuation companies,' the Prime Minister told reporters. 'And one of the things that we held earlier this year in Washington DC was a round table of Australian investment funds who are willing and keen to invest in the United States – just one way in which the Australia US economic relationship is an important one.'
Irish Times
5 days ago
- Business
- Irish Times
Banks that fuelled Ireland's finance rebound face tariff angst
When the United States launched sweeping tariffs against trade partners in April, BlackRock chief executive Larry Fink found himself in Ireland, one of the countries with most to lose if US multinationals were forced to curtail their operations overseas. Fink, whose company was in the running for a big contract with the Irish government at the time, toed a careful line, claiming to 'understand the logic' of Donald Trump 's move while not agreeing with it, and insisting there 'does not need to be a true trade war'. Almost three months on, the Wall Street giants that created thousands of Dublin jobs since Brexit are in a similarly awkward position. They're trying to balance the challenges created by their own government with the opportunities in a country that depends on US multinationals for more than 10 per cent of its jobs and a big chunk of tax receipts. For now, the banks are hopeful their multinational clients will adapt to the trade uncertainty. READ MORE 'It's not obvious to me that that falls off a cliff' under the threat of tariffs, says Marc Hussey, the Irish-born JPMorgan Chase & Co executive who returned home to run the bank's 1,500-strong Dublin business in 2022. Assuming multinationals will 'shrink overnight' would be an 'extreme view', Hussey added, and he is 'not sensing that from any of our clients'. He continues to see growth in the range of businesses he oversees including a global funds administration centre, a workplace solutions business that runs employment share programmes across the world and the EMEA hub for Chase payments technology. Ireland remains popular in JPMorgan's head office too – chief executive Jamie Dimon will travel to Dublin next month to speak at an event, his fourth such trip in six years. Almost a decade on from the Brexit vote that cut off London's banks from several markets inside the European Union, Ireland has become a big draw for foreign lenders. They now employ close to 15,000 people, according to a report from the Federation of International Banks in Ireland (FIBI) last month, with firms including JPMorgan, Citigroup and Bank of America leading the way to set up big EU businesses in the State. That choice puts them at the eye of the tariffs storm in a market that has long been heavily exposed to US multinationals, prompting recent warnings about the outlook for the economy and the risk to financial stability. As part of the EU, Ireland's fate is tied to negotiations with Trump in advance of a July 9th deadline, after which nearly all of the bloc's imports to the US might be hit with a 50 per cent levy. Across the river Liffey from JPMorgan's offices, Citi 's 2,900 staff are working across an innovation hub, the group's EU bank headquarters and an international corporate banking businesses. Citi chief executive Jane Fraser was in town a few weeks ago to mark the bank's 60th anniversary in the State, and hailed Ireland as 'a hub for innovation, a magnet for multinationals and a vital part of the world's economic landscape'. The bank's new Dublin office, to be opened next year with space for an extra 400 staff, is 'a symbol of our long-term investment in Ireland and in Europe', she added in a LinkedIn post. Hussey is hoping the move increases the chances of a long-promised footbridge that would link JPMorgan on Dublin's southside to the northside of the Liffey, where Citi's new office will join the Central Bank's headquarters. Davinia Conlan, Citi's Ireland head and chairwoman of FIBI, argues that there is 'a lot to be positive about from an Ireland domestic economy perspective' and she is hopeful that Citi will ultimately fill its 3,300 capacity in the new site, though she's not putting any timeline on that. 'We're still expecting the economy to grow albeit at a slower pace than we would've seen previously,' she said. Ireland also offers companies the benefit of 'ease of access' to Government, Conlan said. The Department of Finance will soon launch an industry consultation on its next international financial services strategy, a successor to the Ireland for Finance strategy launched in 2020 which covers banks, insurers, funds and other firms that, combined, employ about 60,000. Regulatory simplification will be high on the industry's wish list, Conlan and her peers say, with firms set to call on Ireland to remove some 'gold-plating' of EU rules and to push the bloc to be more competitive around regulation. The international banks' federation, FIBI, is preparing a proposal on simplification which will offer examples of areas where regulation can be 'more efficient', Conlan said, declining to offer gold-plating examples before that. Investments in infrastructure and housing, including a long-promised airport metro, will also be on the list. Fernando Vicario, who heads Bank of America's Dublin-based EU head office, is hopeful that imminent reform of the EU's securitisation market will offer a further boost for his 1,300-strong team, which has been retaining its earnings to support future growth. 'Ireland can be a place where these securitisation deals can be packaged out of Ireland into the rest of Europe,' he said, adding that the State already commands a big presence in this market. Vicario does not expect the Irish Government to pivot to protectionist sentiment, which has cropped up in some countries in response to Trump's trade approach. 'I learned in Boston that America is Irish,' says Vicario. 'In business, people stick to their positions and do business. And we do business with Irish-headquartered companies and with Irish branches and subsidiaries of US companies, all day long. I have quite frankly no problem whatsoever with our passport referring to our US origin.' Ireland has shown it has no problems with US companies either: following Fink's careful diplomacy, BlackRock was last month named a preferred bidder to help manage the State's upcoming multibillion-euro auto-enrolment workplace pension programme. – Bloomberg
Associated Press
20-06-2025
- Business
- Associated Press
Sixth Qingdao Multinationals Summit Held in Qingdao
QINGDAO, China, June 20, 2025 (GLOBE NEWSWIRE) -- On June 19, the Sixth Qingdao Multinationals Summit opened at the Qingdao International Conference Center. Centered on the theme 'Multinationals and China: Connecting the World for Win-Win Cooperation,' the summit serves as a high-level platform for policy dialogue, industrial alignment, and project collaboration among global multinationals. A Media Snippet accompanying this announcement is available in this link. Co-hosted by the People's Government of Shandong Province and Ministry of Commerce, the summit is jointly organized by the Department of Commerce of Shandong Province and the Qingdao Municipal People's Government, among others. This year's summit has drawn wide attention and active participation from the global business community. A total of 465 multinational companies attend the event, including 135 Fortune Global 500 companies and 330 industry-leading enterprises. These firms come from 43 countries and regions, with over 50% from emerging market economies. Reflecting the trend toward greater openness in the services sector, more than 20% of summit delegates represent multinational companies in modern finance, artificial intelligence, and other cutting-edge sectors. In addition to traditional markets such as Japan, South Korea, Singapore, the United States, Germany, and France, the summit has attracted increased participation from emerging regions including ASEAN, the Middle East, and Africa. Notably, enterprises from nine countries such as Vietnam and Egypt participate in the summit for the first time. The summit agenda includes an opening ceremony and high-level forum on the high-quality development of multinationals, three thematic activities, and multiple parallel sessions across four major segments. A new edition of the Multinationals in China research report series will also be released during the event. According to Wang Lei, director-general of the Department of Commerce of Shandong Province, since the launch of the inaugural summit, the past five editions have attracted 421 Fortune Global 500 companies and 967 industry-leading enterprises, with a cumulative attendance of over 3,000 delegates. Source: Qingdao Municipal People's Government Contact person: Ms. Zhang, Tel: 86-10-63074558.
Bloomberg
20-06-2025
- Business
- Bloomberg
US Banks That Fueled Ireland's Finance Rebound Face Tariff Angst
When the US launched sweeping tariffs against trade partners in April, BlackRock Inc. Chief Executive Officer Larry Fink found himself in Ireland, one of the countries with most to lose if US multinationals were forced to curtail their operations overseas. Fink, whose company was in the running for a major contract with the Irish government at the time, toed a careful line, claiming to 'understand the logic' of Donald Trump's move while not agreeing with it, and insisting there 'does not need to be a true trade war.'
