A deal on taxing tech giants at this week's G7 finance meeting would only be the start of a lengthy process, an expert has said.
The US is pushing for a global minimum tax rate which would stop companies from gaming the system and boost government revenues after the pandemic.
G7 finance ministers are expected to discuss the proposal in talks on Friday and Saturday in the run-up to next week’s leaders’ summit in Britain.
Patrick Holden, an expert in international political economy at the University of Plymouth, said a deal would be the first major piece of tax co-operation in the modern era.
But Dr Holden told The National there would still be significant hurdles between a G7 deal and implementing the proposal.
“I think they’ll come up with some minimum agreement and then they’ll have to get the countries at the G20 which is happening later this summer in Italy to agree, and that includes China, Russia and Brazil and lots of other big countries like that,” he said.
“An entity like the G7, it’s like a club, it’s not like the EU or even the United Nations or the World Trade Organisation where they make laws.
“They would all have to put it into legislation in Japan and Canada and the US and UK and so on, so that’s going to be a long process with lots of nuances involved.”
He said: “It will be an important agreement, and it will send a signal in various senses, but there’ll be a lot for lawyers and accountants to work out.”
Germany and the US, which back the minimum tax proposal, both voiced optimism over the prospects for a G7 agreement.
German Finance Minister Olaf Scholz said G7 nations were “very close to concluding an international agreement”.
Tax deal could net billions in revenue
Washington wants a minimum of at least 15 per cent, but there are calls for a higher floor, such as 21 or 25 per cent.
Research unveiled by the European Tax Observatory found that the revenues of EU countries could rise by more than $200 billion a year at the higher rate.
In this scenario, EU countries would force companies to make up the difference at home if they pay a lower rate in overseas tax havens.
This would make it impossible for companies to lower their bills by setting up shop in low-tax countries such as Ireland.
Ireland's corporate tax rate of 12.5 per cent is one of the lowest in the world, attracting a clutch of tech companies, such as Google and Facebook.
Ireland, which is not in the G7, said it had “significant reservations” about the US tax proposal.
French European affairs minister Clement Beaune said Ireland was the EU member most hostile to the idea, with Cyprus and Malta also sceptical.
Alex Cobham, the chief executive of the Tax Justice Network, said at a World Economic Forum event that the extra revenues from a minimum tax could help recovery from the pandemic.
“Fifteen per cent would be a step forward, it would still bring in more than $250 billion of new revenues and that would make it the biggest change in 100 years in international tax rules,” he said.
The pandemic has been the point of the spear
“If they go to 21 per cent, or even better to 25 per cent, we're talking $500bn, $600bn or $700bn, that sort of money.
“When you're thinking about perhaps $50 billion needed for Covax or the amounts to invest in public health systems in lower income countries, suddenly, this is really game changing.”
Dr Holden said the pandemic had given a burst of momentum to the idea.
“The pandemic has done a lot of damage to the finances of countries including major countries like the G7 ones,” he said.
“There’s been a series of crises, but obviously the pandemic has been the point of the spear.”
If you go
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Getting there
Flydubai flies direct from Dubai to Tbilisi from Dh1,025 return including taxes
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The specs
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Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
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Notable salonnières of the Middle East through history
Al Khasan (Okaz, Saudi Arabia)
Tamadir bint Amr Al Harith, known simply as Al Khasan, was a poet from Najd famed for elegies, earning great renown for the eulogy of her brothers Mu’awiyah and Sakhr, both killed in tribal wars. Although not a salonnière, this prestigious 7th century poet fostered a culture of literary criticism and could be found standing in the souq of Okaz and reciting her poetry, publicly pronouncing her views and inviting others to join in the debate on scholarship. She later converted to Islam.
Maryana Marrash (Aleppo)
A poet and writer, Marrash helped revive the tradition of the salon and was an active part of the Nadha movement, or Arab Renaissance. Born to an established family in Aleppo in Ottoman Syria in 1848, Marrash was educated at missionary schools in Aleppo and Beirut at a time when many women did not receive an education. After touring Europe, she began to host salons where writers played chess and cards, competed in the art of poetry, and discussed literature and politics. An accomplished singer and canon player, music and dancing were a part of these evenings.
Princess Nazil Fadil (Cairo)
Princess Nazil Fadil gathered religious, literary and political elite together at her Cairo palace, although she stopped short of inviting women. The princess, a niece of Khedive Ismail, believed that Egypt’s situation could only be solved through education and she donated her own property to help fund the first modern Egyptian University in Cairo.
Mayy Ziyadah (Cairo)
Ziyadah was the first to entertain both men and women at her Cairo salon, founded in 1913. The writer, poet, public speaker and critic, her writing explored language, religious identity, language, nationalism and hierarchy. Born in Nazareth, Palestine, to a Lebanese father and Palestinian mother, her salon was open to different social classes and earned comparisons with souq of where Al Khansa herself once recited.
Specs
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