Daily Management Review

Guardian: G7's historic corporate tax agreement has a huge gap


There is a huge gap in the G7 countries' historic agreement to collect higher taxes from the world's biggest companies.

The omission will allow US giant Amazon to escape such obligations, writes The Guardian.

The agreement calls for companies to pay a percentage of profits in markets where they achieve significant sales. The arrangements should also set a minimum level of profit tax for large companies at 15 per cent. However, the measures should apply to businesses with a profit margin of at least 10 per cent, and it is a question of profits in excess of this figure.

Such criteria could allow Amazon, one of the world's largest corporations with a market value of $1.6 trillion, to avoid the new requirements. The company's Luxembourg subsidiary paid no corporation tax at all last year, even though its European sales revenues reached €44 billion.

This situation makes Amazon a notable target for politicians determined to change the global tax system. However, the corporation's profitability in 2020 was only 6.3 per cent, due in part to heavy reinvestments and in part to efforts to capture market share.

Available official details of the G7 authorities' arrangements indicate that Amazon is not covered by the new requirements, pointed out Paul Monaghan, executive director of the Fair Tax Foundation, a UK organisation that certifies companies that do not evade tax. "If there are any other details that allow us to talk about including Amazon in this framework, that's great, but so far there is no such information," he explained.

source: theguardian.com