Global tax emergency: Time for developing nations to speak up
After decades of inaction, the process could move forward very quickly.
After the publication last week of its first proposal on this issue, the organisation will make a final one in 2020, laying the base for the new international tax system.
After that date, the die will be cast, and it will be practically impossible to influence the reform process. to make their views prevail.
With the largest concentration of multinationals, they are also those most influenced by the pressure of the corporate world, at the expense of their own citizens and the rest of the world.
But by refusing to realise what is at stake, developing countries are also failing in their responsibilities. of sales, excluding employment or other factors that would favour developing countries.
The second pillar is the establishment of an effective minimum corporate tax at the global level.
Some developing countries fear that by abandoning the weapon of tax incentives, they will no longer be able to attract companies.
Yet the evidence that these incentives attract investment is controversial, according to IMF research.
Even more importantly, if the international community agrees on a sufficiently high rate (ICRICT pleads for at least 25 per cent, the average rate in developed countries), this would put an end to the race to the bottom that we are witnessing, whose only winners are the multinationals.
This measure would remove the raison d’etre of tax havens, while ensuring that all states have access to those resources essential for development.
In the absence of an international consensus, some countries have chosen to find compensation solutions.
This is the case of France, which will tax three per cent of the turnover of companies in the digital sector.
Others, such as Mexico, are considering the possibility of forcing platforms such as Uber or Netflix to pay VAT on services provided in the country.
While it is a good initiative to tax revenues that are now escaping, it is impossible to compartmentalise the digital economy and take it as the sole objective of the reform, as more and more companies are using digital technologies as part of their commercial activities.
And it is not with these one-off measures that states will emerge from deficits and repeated austerity cures.
It is time for developing countries to mobilise.
Increasing their fiscal resources is the only way to improve access to health, education, or gender equality or aid the fight against climate change.
If the heads of state and finance ministers of these countries continue to underestimate the importance of these debates, they will soon find themselves forced to accept a new international tax system that will not suit them.
The winners will always be the same, but it will then be too late to protest.