RTC Director

G20 finance ministers back deal to tax companies

G20 finance ministers have backed an "historic" plan which will see multinational companies pay their "fair share" of tax around the world.
The plan to battle tax avoidance puts in place a minimum global corporate tax rate of 15%.
It is likely to affect companies like Amazon and Facebook.

So far, 132 countries have signed up to the framework, being championed by The Organisation for Economic Cooperation and Development (OECD).

The agreement is a further boost for the plan signed up to by leaders of the G7 major economies in Cornwall a month ago.

The G20 finance ministers - who represent 19 countries with the largest and fastest-growing economies, as well as the European Union - announced their support following a two-day meeting in Venice, Italy.

The UK's Chancellor Rishi Sunak hailed the deal as "historic", adding it would ensure the "global tax system is fit for purpose in a digital age".
French Finance Minister Bruno Le Maire said there would be "no turning back".
"We are putting an end to the race to the bottom and the digital giants will now pay their fair share of taxes," he added. "It's a once-in-a-century tax revolution."

The policy - which will also make companies pay more in the countries where they do business - will now go to a meeting of G20 leaders in October for final consideration.

Governments have long grappled with the challenge of taxing global companies operating across many countries.
That challenge has grown with the boom in huge tech corporations like Amazon and Facebook.

At the moment companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.
That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere. This is legal and commonly done.

The deal aims to stop this from happening in two ways.

Firstly it aims to make companies pay more tax in the countries where they are selling their products or services, rather than wherever they end up declaring their profits.

Secondly, a global minimum tax rate would help avoid countries undercutting each other with low tax rates.
Not everyone is in favour, however. Ireland is among those countries which have yet to sign up.

Source-BBC

by RTC Director

German industrial orders fall on tepid global demand

German industrial orders fell sharply in May, hit by weak demand from abroad as the pandemic continued to pummel Europe's top economy, official data showed yesterday.

Orders were down by 3.7 per cent, according to the federal statistics office Destatis, dashing the hopes of analysts polled by Factset who had pencilled in a rise of 0.8 pe rcent compared to April.

However, a year-on-year comparison showed a whopping 54.3 per cent increase compared to May 2020, when the economy came to a screeching halt during the first wave of the pandemic.

International orders in May sank particularly sharply, by 2.3 per cent from Eurozone countries and 9.3 per cent from the rest of the world according to month-on-month data.

Industrial orders are closely watched as a key indicator of future economic activity, especially in manufacturing powerhouse Germany.

Germany's economy shrank in the first quarter as restrictions were imposed to counter a winter surge in COVID-19 cases.

But ING analyst Carsten Brzeski suggested the disappointing May industrial orders data should be taken with a “pinch of salt”.

He noted that “ongoing supply chain disruptions, delivery delays and lack of materials and intermediate goods” due to the pandemic have “blurred the traditional link between industrial orders and production”.

“Consequently, the industrial rebound could be a bit more erratic than previously anticipated,” he said.

“Order books are more than richly filled and reducing backlogs is a bigger problem for German companies than acquiring new orders.”

Last week, German business confidence rose to a near three-year high in June, buoyed by reopenings and falling coronavirus infection rates according to the Munich-based ifo Institute's monthly confidence barometer.

But yesterday, the ZEW institute's monthly barometer measuring economic expectations showed an unexpected slide in investor sentiment.

Concern about the rapid spread of coronavirus variants and material shortages in production weighed on the notoriously volatile index, sending it plunging 16.5 points month on month to 63.3 for July.

Source-AFP

by RTC Director