On 16 June 2021, Sam Thompson, one of our Senior Associates, delivered a presentation at the Trend&Hedge Club online meeting. Sam discussed issues on the recent development of international taxation especially relevant to grain and oil traders using foreign companies (CFCs) in their business.
The first issue related to the Tax Deal agreed by G7 finance ministers on 5 June 2021. The two pillars of the taxation system laid out in the G7 Tax Deal were discussed:
1) countries where multinationals generate revenue to be awarded new taxing rights on at least 20% of profit exceeding a 10% profit margin for the largest and most profitable firms (circa. 100 multinationals);
2) global minimum tax rate of at least 15% (circa. 8000 multinationals: IT/ Oil / Mining / Telecoms).
The OECD’s estimations that such global corporate tax reform could raise billions in revenue for governments, but countries have perceived such measures differently.
The second issue discussed concerned the developments of BEPS Actions. 139 countries, including Ukraine, are signatories to the OCED/G20 Inclusive Framework on BEPS (Base Erosion and Profit Shifting). There are 15 BEPS Actions setting out both domestic and international rules and instruments to address tax avoidance, ensuring that profits are taxed where economic activities generating the profits are performed and where value is created. Many countries are yet to fully implement the BEPS Actions.