Monday, October 2, 2023

About thirty countries have imposed a tax on extraordinary profits due to the energy crisis | eCONOMY

Governments around the world have used fiscal policy to protect their companies and workers from the last two economic crises. After the retreat of the pandemic, which prompted spending on protection networks, the energy crisis has once again changed the national fortunes with new taxes, subsidies and price caps. the extraordinary profits of energy companies. “These measures are rare in recent history, but were introduced exceptionally to increase revenue for additional tax spending, limit inequalities and strengthen social cohesion,” said the organization based in Paris in its latest report on Fiscal Policy Reforms. 2023, which also saw an increase in the net wealth tax.

The energy crisis, exacerbated by Russia’s attacks on Ukraine, will lead by 2022 to levels of inflation not seen since the 1980s. Central banks responded with sharp rate hikes, while governments introduced fiscal measures, further pushing up public debt. This, according to the World Bank, will reach 100% of global GDP in 2020.

Due to the increase in prices, countries have decided to review their taxes, starting with personal income tax and Social Security contributions. Many of the 75 jurisdictions questioned by the OECD admit that these tax figures have been touched to support households and companies, especially the most vulnerable. Despite the introduction of new taxes, these revenues continue to account for the majority of tax collection in most of the countries examined. In Belgium, Spain, Germany and the United States they are, according to the OECD, more than 60% of the total.

The reforms mainly raise the maximum rate (Indonesia, Japan, Norway, Singapore and Sweden) or raise other links (Czech Republic, Norway, Netherlands). Most countries (up to 63), however, decided to narrow the base to protect the middle and lower classes. It was decided by Germany, Spain, South Korea or Norway. “Most of the reforms to reduce the personal income tax base are aimed at helping low- and middle-income people, especially families with children, the self-employed and unincorporated businesses, cope with the substantial increase in their cost of living,” explained the document presented. this wednesday.

However, the need to get more revenue for new measures in an environment of rising rates makes countries look for other activities. “Some businesses have experienced significant increases in growth at the end of 2021 and throughout 2022, especially those operating in the energy sector,” said the OECD report. The document shows that many countries in Europe and some in Latin America have responded with temporary rates of extraordinary benefits, solidarity contributions and other measures in that sector, which is considered one of the clear winners of the energy crisis. Among these States are most of the EU, the United Kingdom, Argentina, Brazil or Colombia. However, the number of jurisdictions that have introduced a tax on the financial sector is much smaller. Among others, it is done in Spain, Canada and Colombia.

Along with the unique benefits, the other front where the countries operate is the net worth of the citizens. “The number of property tax reforms in 2022 is more than double that registered in 2021,” indicates the OECD document. In addition, new taxes are created on net wealth (Chile, Colombia and Spain), empty assets (Ireland), transactions and income from crypto assets (Indonesia and Portugal) and share buybacks (United States and Canada).

Minimum tax on multinationals

The report also points to the progress of the global agreement reached in October 2021 to plug the loopholes exploited by large multinationals to avoid national treasures. This agreement has two pillars. The first is that these corporations pay taxes where they operate, which includes the relocation of between 212,000 and 225,000 million dollars (about 200,000 million euros). That was more than initially expected. The second is based on a minimum rate of 15% for large corporations, which will contribute between 141,000 and 260,000 million additional dollars in savings.

The OECD report highlights that “a significant number of countries” have taken steps to deploy the second part of the agreement. For example, remember that the EU Member States must include in their legislation by the end of 2023 the European directive on the minimum tax of multinationals. Many countries have followed this path: South Korea, Japan, Liechtenstein, Switzerland, the United Kingdom, Canada or Colombia, among others.

Nation World News Desk
Nation World News Desk
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