Globally active companies must adapt to stricter taxes. 130 countries agreed on a comprehensive tax reform on Thursday. Among other things, this ensures that companies are taxed worldwide at a minimum rate of 15 percent. Federal Treasury Secretary Olaf Scholz (SPD) described the agreement as “colossal progress” during a visit to Washington. The states, which together bring together more than 90 percent of the world’s economic power, are said to have sent an important signal: “The downward tax competition is over.”
Scholz assumes that the reform can be agreed next weekend at the meeting of the 20 most powerful economies in Venice. In addition to the minimum tax for companies, it must be determined that large tech companies also pay more taxes and that these taxes are distributed more fairly. Scholz said he wanted to “bring the harvest to the barn in Venice”. G7 finance ministers agreed on a global tax reform in early June.
“This is a good success for justice and democracy,” Scholz said. The money can be used to finance investments in climate protection and infrastructure. Germany also expects higher tax revenues, said the vice-chancellor, who is also running for the SPD for chancellor. Companies like Amazon would pay more tax in the future, including in Germany.
However, more and more countries are pushing for exception rules, such as Eastern European countries for car production or the United Kingdom, which wants to exempt its banks from the regulation. It is expected that it will take up to three years before a political agreement can be transposed into national law in all states.
The existing set of rules is about 100 years old
Scholz had arrived in the American capital on Wednesday evening. There is a lot of support in Washington for minimum tax. “I want to get my hands on the agreements with the US government,” Scholz said. He leads to “a lot of conversations”. Scholz will be in Washington through Friday, including meetings with US Treasury Secretary Janet Yellen and Fed head Jerome Powell.
For the US government, the federal government is one of the closest allies in the fight for a global minimum tax, it said in Washington. In particular, Scholz, who has been advocating minimum tax since taking office in 2018, is valued by Yellen as a partner. The administration of US President Joe Biden has put global taxes high on its agenda. The country needs the revenue to fund the stimulus packages triggered by the pandemic.
Since the 1950s, more and more states have pushed for a fairer distribution of taxes and, most recently, adaptation to the digital age. The existing set of rules is now about 100 years old.