EU to impose 15% global corporate tax

Bulgarian state radio reported on December 26, 2021 that the European Commission proposed a directive to ensure effective tax rates to large multinational groups
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Delivering on a promise to be the first to implement a global tax reform agreement, the proposal sets out how to put into practice the principle of a 15% minimum tax on multinationals with revenues in excess of 750 million euros, agreed by 137 countries
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Valdice Dombrovskis, European Commission Vice-President for Economic Affairs, said: “Europe is playing its full role in creating a fairer global corporate tax system
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Increased public funding is needed to achieve a fair and equitable taxation system.
Continued growth and investment, and meeting public funding needs, are both addressing the impact of the pandemic and making progress on the environment and digital transformation
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Incorporating a minimum effective tax agreement into EU law will be critical to combating tax avoidance and evasion
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The rules will apply to any large domestic and international groups whose parent or subsidiary is located in an EU member state
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The proposal also guarantees effective taxation if the parent company is located in a low-tax country outside the EU and no equivalent rules apply
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The proposal also provides some exceptions under the global agreement
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To reduce the impact on real economic activity, companies will be able to exempt income equal to 5% of the value of tangible assets and 5% of wages
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The rules also provide for exemptions from minimum profit margins to ease the burden of compliance in low-risk situations
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This means that when the average profit and income of a multinational group in a jurisdiction falls below certain minimum thresholds, that income is not taken into account when calculating the ratio
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All EU member states must unanimously agree in the Council for the legislation to take effect
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The European Parliament and the European Economic and Social Committee also need to consult and comment
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