Opinion: November 27, 2021. How Would a Global Corporate Tax Work?

A global tax rate is an agreement between nations that will set up a flat fee for taxing corporate profit all over the world (signing nations). So far about 140 countries are agreeing to this proposal.

The idea behind this is to reduce (or eliminate) the attractiveness of tax havens all over the world. For example. If a global tax rate is set up at 15% and a company from country A opens a subsidiary in country B where the corporate tax rate is 12%, country A will be able to collect the 3% difference.

In my opinion, this is an overreach from governments which will reduce the interest of companies opening businesses in countries which are more tax advantaged. Countries like country B will have less companies opening in their territory and will end up losing that revenue. Tax collection only grows government bureaucracies and reduce the efficiency of businesses.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.