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With reference to the global minimum tax deal, consider the following statements:
1. All UN member countries joined the agreement.
2. The global minimum tax rate would apply to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
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With reference to the global minimum tax deal, consider the following ...
A global deal to ensure big companies pay a minimum tax rate of 15% and make it harder for them to avoid taxation has been agreed by 136 countries, the Organisation for Economic Cooperation and Development said.
- The OECD said four countries – Kenya, Nigeria, Pakistan and Sri Lanka – had not yet joined the agreement, but that the countries behind the accord together accounted for over 90% of the global economy.
- Why a global minimum tax? With budgets strained after the COVID-19 crisis, many governments want more than ever to discourage multinationals from shifting profits – and tax revenues – to low-tax countries regardless of where their sales are made.
- The global minimum tax rate would apply to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.
- Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top up” their taxes to the 15% minimum, eliminating the advantage of shifting profits.
- A second track of the overhaul would allow countries where revenues are earned to tax 25% of the largest multinationals’ so-called excess profit – defined as profit in excess of 10% of revenue.
Hence only statement 2 is correct.
Most Upvoted Answer
With reference to the global minimum tax deal, consider the following ...
Global Minimum Tax Deal: Analysis of Statements
The global minimum tax deal, aimed at addressing tax avoidance by multinational corporations, has generated significant discussion. Let’s analyze the given statements.
Statement 1: All UN member countries joined the agreement.
- This statement is **incorrect**.
- While many countries have endorsed the agreement, not all UN member states have signed on. Some nations, particularly those with low tax rates, have opted out or expressed reservations.
Statement 2: The global minimum tax rate applies to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.
- This statement is **correct**.
- The agreement specifically targets multinational enterprises with global sales exceeding 750 million euros. This threshold is designed to ensure that the tax framework applies primarily to large corporations, which are more likely to engage in profit shifting practices.
Conclusion
- Given the analysis, the correct answer is **option 'B'**: "2 only."
- The global minimum tax deal establishes a framework for taxing multinational entities, but it does not have universal participation from all UN member countries.
This distinction highlights the complexities and challenges surrounding international tax agreements, especially in reaching consensus among diverse economies.
The global minimum tax deal, aimed at addressing tax avoidance by multinational corporations, has generated significant discussion. Let’s analyze the given statements.
Statement 1: All UN member countries joined the agreement.
- This statement is **incorrect**.
- While many countries have endorsed the agreement, not all UN member states have signed on. Some nations, particularly those with low tax rates, have opted out or expressed reservations.
Statement 2: The global minimum tax rate applies to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.
- This statement is **correct**.
- The agreement specifically targets multinational enterprises with global sales exceeding 750 million euros. This threshold is designed to ensure that the tax framework applies primarily to large corporations, which are more likely to engage in profit shifting practices.
Conclusion
- Given the analysis, the correct answer is **option 'B'**: "2 only."
- The global minimum tax deal establishes a framework for taxing multinational entities, but it does not have universal participation from all UN member countries.
This distinction highlights the complexities and challenges surrounding international tax agreements, especially in reaching consensus among diverse economies.
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With reference to the global minimum tax deal, consider the following statements:1. All UN member countries joined the agreement.2. The global minimum tax rate would apply to overseas profits of multinational firms with 750 million euros ($868 million) in sales globally.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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