Multinationals paid 9% less in taxes in 2017 than they did during the 2008 global financial crisis, the Financial Times reported on Monday.
Drawing on a generations’ worth of financial statements in nine sectors, the FT compared the increasing divergence between the tax rates reported by the multinationals and the effective sums paid, including delaying payments.
The effective tax rates have dropped 24-to-34% since 2000. For technology behemoths alone, effective tax rates have dropped by 13%. At the same time, taxes on consumption and earnings have surged by 6% since 2008, according to the KPMG accountancy.
Deep fears have emerged that US President Donald J. Trump‘s tax package will trigger a new race to the bottom among the G20 and the OECD’s promotion of a 15-point programme against tax avoidance has had little impact, while the recent push by the European Commission has been met by fierce opposition from a number of EU member states.
The EU Commissioner for Tax, Pierre Moscovici, admits that member states are responsible for setting tax rates, he is advocating a campaign against profit-shifting. Moscovici wants to limit the scope of inter-company loans, as well as shorten the time lag between reporting profits and making payments.
The Commission’s campaign undermines the growth model of countries like Malta, Luxembourg, Cyprus, the Netherlands, and Hungary, while additional pushback is coming from technology behemoths, including Apple, Google, and Amazon.
US technology companies alone have built a reserve of $2.6 trillion in untaxed cash that is held offshore, according to the Institute for Taxation and Economic Policy. That reserve will now be hit with a 15,5% one-off levy, but the US corporate tax rate has simultaneously been slashed from 35% to 21%.
The one-off levy could fetch 400-500 billion, the FT estimates.