Corporate Tax Chiefs Voice Concerns About Global Minimum Tax Proposal
By Nina Trentmann
Tax chiefs at international companies are voicing concerns about
a proposal that would introduce a global minimum tax and could
result in higher tax payments for some companies.
The proposal is part of an effort by the Organization for
Economic Cooperation and Development to revamp the international
tax system by expanding and reallocating the global tax pie.
E-commerce giant Amazon.com Inc. said the new tax should be
applicable to all types of business and not result in different tax
rates for foreign and domestic taxpayers.
"It is important that consensus is achieved with sufficient
detail to foster consistent application and avoid multi-layer
taxation," the company's vice president for global tax, Kurt Lamp,
said in written comments made public by the OECD on Tuesday.
The remarks, released ahead of an OECD consultation event
Monday, mirror comments multinationals provided in November on a
related proposal on corporate taxation for consumer-facing
industries. Executives expressed concerns around the lack of detail
and the possibility of sweeping changes to their global
The suggested minimum tax resembles the U.S.'s Global Intangible
Low-Taxed Income provision that was introduced in late 2017 and
sets a minimum rate for the taxation of overseas income generated
by U.S. companies.
The OECD's proposed global minimum tax would apply to companies
with income from cross-border activities that pay taxes below a
certain threshold. The new tax would only be relevant in cases in
which companies don't pay sufficient tax on their overseas income.
Otherwise, national tax laws and rates would continue to apply.
Determining at what level tax payments are sufficient could
result in discussions among OECD member states, according to Manal
Corwin, principal-in-charge of KPMG's national tax practice in
Washington. Some countries have used low tax rates as a tool to
attract multinational companies, irking jurisdictions with higher
The OECD proposal, dubbed Global Anti-Base Erosion Proposal, or
Pillar II, lacks clarity on various elements, Ms. Corwin said.
"Most corporates are concerned about the level of complexity and
the threat of double taxation."
"Businesses are concerned about the level of change," she
The OECD, which aims to have agreement among its 36 member
states on the tax proposals by 2020, didn't immediately respond to
a request for comment.
Many corporate tax departments still grapple with the OECD's new
framework on base erosion and profit shifting -- or BEPS -- that
was introduced in 2016, and with the implications of the 2017 U.S.
In the comment letters released Tuesday, drugmaker
GlaxoSmithKline PLC warned of additional complexities that could
arise from the proposal.
"There is a risk of a significant and complex administrative and
compliance burden being created in a disproportionate manner,
especially in light of the existing BEPS measures that countries
are still in the process of rolling out globally," GSK said in a
statement made public by the OECD.
It is critical that the new proposal functions alongside
existing tax regulations, GSK said.
Consumer-goods giant Unilever PLC said more details are needed.
"It is difficult to form a proper view on Pillar II in its current
somewhat open-ended form," wrote Janine Juggins, the company's
executive vice president for global tax and treasury, and
Sebastiaan de Buck, the company's vice president for tax strategy
and mergers and acquisitions.
"We also question whether this proposal properly balances
complexity and impact and whether instead we are on a path which
prolongs uncertainty for global businesses and will weaken global
economic growth," they wrote.
Danish energy company Ørsted A/S said it might be premature to
introduce new tax rules, given that the OECD's new framework on
BEPS only took effect in 2016. "The full effects of these
initiatives cannot yet be properly assessed," Ørsted's head of tax,
Karl Berlin, and its director for international and mergers and
acquisitions tax, Pernille Nygaard Rasmussen, wrote.
Write to Nina Trentmann at email@example.com
(END) Dow Jones Newswires
December 03, 2019 20:54 ET (01:54 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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