Dera Spiegel: Joe Biden Declares War on Tax Havens – in Europe, Too
22 April 2021
U.S. President Joe Biden is calling for a minimum corporate tax rate of 21 percent for companies. But countries like Ireland and Luxembourg have established a lucrative revenue stream through big breaks for multinationals. A number of EU countries could soon feel the pinch.
If you want to know why a company should have its headquarters in
Ireland these days, the best place to ask is IDA Ireland, the
government’s foreign direct investment agency based in Dublin.
The
Emerald Isle, their lobbyists rave, has a "great density of data
centers.” It advertises the country’s large pool of young talent with
above-average qualifications as well as international and innovative
companies, ranging from Microsoft and Facebook to German corporations
such as Allianz, Zalando and SAP.
But when asked if perhaps the real attraction for investors is the
extremely low corporate tax rate of 12.5 percent, the IDA declines to
answer. For that, the agency says, it is best to contact Paschal
Donohoe, the Irish finance minister and chair of the Eurogroup.
The man currently finds himself facing a problem that has become a
concern for all of Europe. Since U.S. President Joe Biden presented his
groundbreaking proposal for a global minimum tax on corporate profits,
old rifts have ripped open again on the Continent. Whereas large member
states such as Germany approve of the move, it would hit smaller EU
members like Ireland, the Netherlands and Slovakia hard.
For years, they have lured international corporations into their
countries with the promise that they will be largely spared from the
grasp of the domestic tax authorities. If the U.S. gets its way, that
could be the end of it.
Numerous EU countries would not only have
to reckon with revenue losses in the billions, but also with the loss of
corporate headquarters and thousands of jobs.
Countries like France or Italy, on the other hand, would feel
vindicated. Out of anger with corporations like Amazon that have barely
paid any taxes at all in Europe in recent years, they enacted their own
digital taxes - and drew the ire of Donald Trump by doing so. The former
U.S. president even threatened retaliatory tariffs on German cars,
Italian cheese and French handbags.
Now, the U.S. has performed a spectacular about-face – and raised
difficult questions for the Europeans: How seriously must pledges from
Brussels to fight tax evasion be taken? Would it just be the tax havens
that have to reckon with losses or would they also be painful for large
exporting countries like Germany?
And, more importantly: Will the
Europeans manage to find a common line with the U.S. in the tax
negotiations that have been going on for years in the OECD club of
industrialized nations?
At issue here is the safeguarding of public finances, the power of
global digital corporations and the West’s ability to take action. Since
Biden moved into the White House, high-ranking EU politicians like
European Commission President Ursula von der Leyen have promised a
"re-energizing of trans-Atlantic relations.” But now she has to prove
that she can back up her eloquent formulations with concrete steps.
Der Spiegel
© Der Spiegel
