Tax rate for multinationals
The government will next month submit to Parliament the new taxation framework with the establishment of a minimum tax rate of 15% for large multinational companies as well as large Greek groups.
The plan that will be presented on Wednesday to the cabinet by Minister of National Economy and Finance Kostis Hatzidakis integrates a relevant European Union directive into Greek legislation.
Essentially, the bill aims to put an end to the tax practices of multinational companies that currently allow them to shift their profits to countries with zero or very low taxes. The plan developed by the Organization for Economic Cooperation and Development (OECD) creates a set of international tax rules to ensure that these businesses pay their fair share of taxes wherever they operate.
According to ministry sources, by removing a significant part of the benefits of shifting profits to zero or very low tax jurisdictions, the reform to establish a global minimum tax will ensure a level playing field for businesses worldwide.
In Greece, the measure concerns 14 multinational companies and dozens of multinational subsidiaries operating within the Greek borders. The draft law regulates the imposition of a minimum effective tax rate of 15% on entities belonging to multinational business groups or large domestic groups with annual revenues exceeding 750 million euros.
Since the middle of the last decade, the OECD has been leading an international effort to address the practices of multinational business groups and the tax avoidance they aim at. The OECD focuses on so-called “base erosion and profit shifting,” the artificial (and unfair) transfer of profits to countries with low or no taxation in order to avoid taxing corporate income.
In fact, the OECD estimates the annual loss of revenue, for the tax authorities, from these practices at at least $150-200 billion, or about 6% of the revenue of the states, from corporate income taxation, worldwide.
At the same time, the effort of the OECD and its member-states faces the additional challenge of a global economy, where products and services are traded and provided digitally.
