Denmark finance minister endorses global minimum tax for multinational groups, common tax base

by Julie Martin, MNE Tax

We want both a common base and a minimum rate. International corporate tax needs international political cooperation. We believe an OECD solution to digital giants demands a minimum rate

— Kristian Jensen (@Kristian_Jensen) March 3, 2019

Jensen added that Venstre wants to be certain that both tech and traditional companies contribute to society.  

The “Inclusive Framework on BEPS,” a collation of 128 countries, is seeking to achieve consensus by the end of 2020 on new rules to govern the taxation of multinational group profits. The aim of the initiative is to curtail tax avoidance by multinationals, particularly multinationals in the digital sector.

Under discussion are three different proposals for new rules that would increase the taxing rights of “market” countries,  known as “pillar 1” proposal, and a global minimum tax, a “pillar 2” proposal.

Although the design is not final, the pillar 2 global minimum tax proposal calls for the development of rules that would tax the income of a foreign branch or a controlled entity operating in a country if that income was subject to a low effective tax rate in the jurisdiction of establishment or residence. These rules, similar to the new US global intangible low-taxed income (GILTI) rules, would be augmented by a new tax on base eroding payments, similar to the US base erosion and anti-abuse tax (BEAT).

Rasmus Corlin Christensen, a Ph.D., Fellow at Copenhagen Business School, noted that it unlikely that Denmark can gain tax revenue from any of the pillar 1 proposals, hence its support for pillar 2. 

Denmark raised formal objections to the EU Commission’s proposal for a common consolidated corporate tax base (CCCTB) last year, along with Ireland, Sweden, The Netherlands, the UK, Malta, and Luxembourg.

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Julie Martin

Founder & Editor at MNE Tax

Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.

Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.

Julie can be reached at [email protected].

@mnetax

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Julie can be reached at [email protected].