💰 Tech Tax Deal implications 💰

Investing and Markets 📈
1

:moneybag: Tech Tax Deal implications :moneybag:

Now the deal seems to be close to complete I was wondering what stocks will be affected other than the obvious ones and how it may affect the market. Any ideas?

I have read that the tech companies will just pass the costs on to customers but in reality surely it will hit the SP as well even if for a short period. Maybe I am overthinking it but it feels like this could be a huge event especially across borders that are no longer that appealing due to X% tax rates.

Is this going to mean the US stocks are less profitable? Personally I like LSE steady stocks and dividends so wondering if this is maybe a safer road at the moment. I am sure someone cleverer than me has all the answers :stuck_out_tongue_winking_eye:

1 Like
2

Looks like it has gone through so the impact could be huge on some SPs of companies who have avoided paying tax in many countries.

1 Like
3

I guess we will find out on monday. Just having a look at stocks I have some of in to try and see if they will be affected. Mainly data services and e-commerce, but would I wouldn’t be surprised if everything else dives as well :sweat_smile:

I suspect the large companies it is targeted at will find a way to minimise any tax they pay using any loopholes they can, or as you said, by passing costs on to customers (or suppliers).

1 Like
4

Yeah it is hard to tell as it may actually boost some in the countries that will get more tax $/£. I honestly don’t know how it will pan out but it is interesting :+1:

5

Seems that there is a potential loophole already… :grimacing:

1 Like
6

Yep it will be hard to find a way to tax a company that doesn’t make big profit :joy: Amazon concentrate on market share and reinvesting which is a difficult one to manage.

7

https://www.oecd.org/newsroom/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm

Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.

Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. It will re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there. Specifically, multinational enterprises with global sales above EUR 20 billion and profitability above 10% - that can be considered as the winners of globalisation - will be covered by the new rules, with 25% of profit above the 10% threshold to be reallocated to market jurisdictions.

Pillar Two introduces a global minimum corporate tax rate set at 15%.

At first glance this may seem good. Nevertheless I see no mention to the introduction of a global maximum corporate tax rate. Nor I see mentions to the introduction of maximum tax rates for individuals.

I fear totalitarian winds in disguise are still pushing the sails. I fear if these winds prevail, financial freedom through savings and investing will become increasingly harder to achieve for us of little means.

I’m for the payment of taxes. Within reason. For the benefit of the individuals. Not the bureaucracies, whom are there to serve, not to be served.

I’m for fiscal competition amongst states, for competitions favours the consumer. This agreement goes one step forward in the opposite direction towards harmonisation. One more nail in the coffin of individual rights with the excuse of (alleged) fairness.

https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.htm

Not all is bad though:

Double taxation of profit allocated to market jurisdictions will be relieved using either the exemption or credit method.

This is good I think.

I have the impression I’ve read somewhere this agreement aims to ensure corporations pay the taxes they are due in the countries where they sell their products/services. I share that goal. But to give to states the power to establish the minimum tax rate they can impose is, in my view, reversing the natural order of how things ought to work in a liberal democracy where the rights of individuals are sacred ground and limitations to the coercive powers of the state are, or should be, in place.

8

This topic was automatically closed 416 days after the last reply. New replies are no longer allowed.