Paris: Global tax initiatives aimed at billionaires and multinational corporations are encountering significant hurdles, particularly with the United States under President Donald Trump opposing key reforms.
The billionaire real estate mogul has withdrawn the U.S. from an international agreement focused on taxing multinationals and has threatened to impose tariffs on countries that target American tech giants.
Here’s a summary of the current landscape:
- Taxation on Major Tech Firms
Countries have accused giants like Amazon, Microsoft, Alphabet (Google's parent company), and Meta (Facebook's parent company) of evading local taxes.
On February 21, Trump warned nations that impose fines or taxes on big tech and other U.S. companies that are "discriminatory, disproportionate," or aimed at benefiting local businesses.
"My administration will take action, including tariffs and other necessary measures to protect the interests of the United States," he stated in a memo.
This stance has reignited tensions between Washington and its allies regarding the taxation of digital services.
During his first term, Trump threatened tariffs on U.S. imports of French champagne and cheese after France introduced a digital services tax in 2019.
Since then, seven additional countries have adopted similar measures.
The French tax generated 780 million euros ($887 million) for the government last year.
Currently, the European Union is considering a digital services tax if negotiations regarding Trump's proposed 20 percent tariffs on EU goods do not succeed.
Britain, which is eager to finalize a trade agreement with the U.S., may rethink its own digital tax, which currently yields £800 million annually.
British Trade Secretary Jonathan Reynolds remarked that the digital tax is not "set in stone and we can have discussions about it."
- Global Corporate Tax
In 2021, nearly 140 countries reached an agreement to tax multinational corporations, facilitated by the Organisation for Economic Co-operation and Development (OECD).
The OECD agreement consists of two "pillars."
The first pillar allows for the taxation of companies in the countries where they generate profits, aiming to curb tax evasion, particularly targeting tech giants.
The second pillar establishes a minimum global tax rate of 15 percent, which has been accepted by around 60 economies, including Brazil, Britain, Canada, the EU, Switzerland, and Japan.
Daniel Bunn, head of the Tax Foundation, a U.S. non-profit think tank, noted that discussions on implementing the first pillar "have been stalled for some time," even during Joe Biden's presidency.
Franco-American economist Gabriel Zucman told AFP that the EU's forthcoming response will be critical.
"If the EU and other nations concede and allow American multinationals to avoid taxes, it will regrettably mark the end of this vital agreement," he warned.
- Taxing the Wealthy
Attempts to impose taxes on the ultra-rich are also encountering obstacles.
Brazil, during its G20 presidency, advocated for a plan to implement a two percent minimum tax on the net worth of individuals with assets exceeding $1 billion, a proposal projected to generate up to $250 billion annually.
The Biden administration hesitated on the proposal, and it is unlikely to gain traction with Trump, a billionaire and supporter of tax reductions, in office.
According to Forbes magazine, nearly a third of the world’s billionaires are from the United States, surpassing the combined total of those from China, India, and Germany.
At a recent conference in Paris, French economist Thomas Piketty emphasized the urgency for individual countries to take action without waiting for a G20 consensus.
"We need nations to implement reforms as soon as possible," he stated.
"History shows that once a few powerful countries adopt specific reforms, it sets a new standard."