G20 agrees on digital tax reforms: DONG-A ILBO
G20 leaders agreed on a digital tax proposal on Saturday at a meeting in Rome, Italy, according to Reuters and the Associated Press. The agreed proposal involves two key changes in the way multinationals pay their taxes.
First, a new type of tax is levied on multinational companies that shirk their tax responsibilities despite a large profit generated in the global market by setting up a business in a tax haven. With the new proposal put in place, from 2023, multinationals with an annual turnover of more than 20 billion euros (approximately 27 trillion won) and an operating profit of more than 10% are supposed to pay a tax equivalent to 25%. profit margins above 10% where their business is based. The South Korean government will also have a great chance to levy more taxes on global companies that generate profits in the domestic market. Samsung Electronics and SK Hynix may be subject to digital tax.
Second, the global corporation tax should be set at a minimum of 15%, which will apply to multinational companies with consolidated sales exceeding 750 million euros (approximately 1,000 billion won). Thus, many governments can compete to attract more businesses by reducing corporate taxes.
German Prime Minister Angela Merkel shared ‘good news to report’ with members of the press, saying world leaders have agreed on minimum business tax, which she defined as signs clears of justice practiced in the digitized world.
US President Joe Biden has added some meaning to the agreement that this is diplomatic action that is not just about tax negotiations but also about overhauling the global economy. U.S. Treasury Secretary Janet Yellen said in a statement that the deal will make the global economy a better platform where U.S. businesses and workers can prosper more.
Jae-Dong Yu [email protected]