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I’ve been thinking about this recently and there’s probably a flaw to this but hear me out and I’m open to hearing why I’m wrong on this.
Basically, we have a fairly large group of countries that are annoyed by companies funneling profits to tax havens. Why won’t we ban companies that do this from operating in EU and other countries participating in anti tax haven coalition? Are some WTO or other treaties preventing this?
Because it is hard to track. For example you have say Turkish made clothes being sold into the EU. It would be extremely easy to set up a company in say Switzerland, which owns the brand rights for those clothes and makes all the money. Turkey is not part of the EU and not a tax heaven. At the same time the product is made in it and they do not have to disclose any relations of their companies.
So to do it properly, you would have to get nearly all countries in the world involved in it.
These loopholes like moving IP somewhere else and licencing it back were specificially created to enable tax evasion. They can be closed again just as easily. The reason the governments aren’t doing it is because the ultra rich don’t want it to be done.
Banks already collect information on ownership structure and primary sources of revenue and expenses as part of KYC responsibility. This could be leveraged here I guess?
The agreement says the tax is going to be collected to the subsidiaries in countries that implemented the agreement. IANAL but one problem I see with Switzerland in particular is that they have a free trade agreement with the EU, so I think they could get away with officially selling goods and services directly through the main company in Switzerland and avoid having profits in their subsidiaries.
I didn’t mean restricting trade with other countries. Companies that partake in tax optimization using tax havens have subsidiaries in various EU countries. Wouldn’t they be seriously kneecapped if they were confined to operating in tax havens and tax haven tolerant countries only? It wouldn’t do much against some purely financial enterprises but companies like Google want to set up shop here for various reasons.
This is the best summary I could come up with:
Back in June this year, Switzerland set an example for other wealthy European countries, by vocally supporting a minimum corporate tax rate, suggested by the Organisation of Economic Cooperation and Development (OECD).
However, Switzerland could now potentially be getting cold feet, with increasing appeals for the tax reform, which was originally supposed to go live on 1 January next year, to be delayed.
Other major Swiss firms include food and drink company Nestlé with its headquarters in Vevey, whereas watch manufacturer Rolex is based in Geneva and UBS bank is split between Zurich and Basel.
Increasing the minimum corporate tax could prompt these companies and several others to look for homes elsewhere, potentially fundamentally changing the fabric of the Swiss economy, which has stayed strong for decades.
Not only this, if Switzerland loses its tax haven status, it may experience a plunge in both individual and corporate funds from overseas in its offshore bank accounts.
Switzerland’s turnaround comes as several other countries, such as the US, India, China, Hong Kong, Singapore, Brazil and the UAE, amongst several others, are also hesitating over whether to implement the OECD deal in 2024.
The original article contains 457 words, the summary contains 190 words. Saved 58%. I’m a bot and I’m open source!
The lobbying behind the scenes must’ve been intense
