Bermuda knows how to sell itself. It attracts tourists with the appeal of open water and with the promise that international companies will not tax their profits.
Bermuda is a multinational tax savings fund that is in a completely legal way, but now there is great pressure to change.
Rishi Sunak It hosted a meeting of G7 finance ministers today. Avoid corporate taxes It is a burning issue in France, Italy, Germany, Canada, Japan and the United States.
Many years later, there is a change in the air about how to reform international tax rules.
“In a complex and global digital economy, it is becoming clear that we cannot continue to trust a tax system that was largely designed in the 1920s,” says Rishi Sunak.
Multinationals have registered subsidiaries around the world. As such, they can legally convert sales or profits between those companies to reduce their tax bills.
The UK levies a 19% lead rate on corporate profits. According to the Tax Justice Network, effective corporate tax rates for US multinationals in Ireland (8.1%), the Netherlands (4.9%) and Luxembourg (1.8%) may be significantly lower.
In places like the Cayman Islands, the British Virgin Islands and Bermuda, nothing.
From United States He proposes a solution: the global minimum corporate tax rate is 15%.
The idea is that if a multinational company transfers money to a tax haven and pays less than 15%, the country where the headquarters are located can bridge the gap.
In theory, this eliminates any incentive for companies to make a profit.
The problem is that the tax breaks go entirely to the country where the headquarters are located, which in the case of the world’s largest companies is the United States.
The consultant wants multinational companies to pay taxes to their customers wherever they are.
If you purchased the Microsoft Office product in the UK, billing is currently in Ireland. If you buy a book on Amazon Kindle in the UK, it will be charged for sale in Luxembourg.
Until recently, if you had a Netflix subscription in the UK, the transaction was charged in the Netherlands.
The Fair Tax Trust estimates that the UK will be in a better position to reach $ 8 billion a year if a 15% minimum tax is introduced.
“IPPR calculates [£8 billion a year] Paul Monacon, director of the Fair Tax Trust, says raising the NHS pay by 5% is enough to provide a living wage for everyone working in the health sector and free care for those over 65.
Without taxes there are no hospitals, no schools, no roads.
Ultimately, the issue is about funding public services.