Global income tax. On January 18, the OECD made a presentation on the review of the economic impact of the global reform that places a 15% income tax floor on large corporate groups. The analysis indicates that the revenues derived from the application of the tax will be higher than expected. Likewise, the review highlights that with the application of the reform, low and middle income countries will benefit more than high income countries. Within this framework, the Colombian Minister of Finance, José Antonio Ocampo, announced that he will seek to lead a Latin American coalition to polish the implementation of the tax in the region. Thus, he will work with the objective of promoting the creation of this space and concrete proposals in July 2023, when the First Latin American and Caribbean Summit for Inclusive, Sustainable and Equitable Global Taxation will be held.
Regarding the global agreement, the OECD expects the global minimum tax to generate annual global revenues of about USD 220 billion. This is a significant increase from the OECD’s previous estimate of USD 150 billion. The analysis also highlights that low- and middle-income countries are expected to gain the most in proportion to existing corporate tax revenues. According to OECD, the changes in estimated collection results arise from the change in the design of the income tax methodology and also from better data collection to make the estimates.
Despite these estimates, Colombia will seek to discuss changes in the regional implementation of the tax. This is due to Minister Ocampo’s perception that the global agreement “does not adequately reflect the interests of developing economies”. Thus, his intention is to create a “real cooperation mechanism” that allows that not only “the very large multinationals are reached by the regulation” and that also loses the “bias in favor of the countries that have as parent company the multinationals reached by the tax”.
In this sense, it will seek to create a regional coalition to review the implementation and scope, initially working on its construction with Chile and Brazil. At a later stage, it will seek to include Mexico. Meanwhile, at the national level, the Colombian Ministry of Finance will lead a forum, on May 2 and 3, to cement the aforementioned proposals. Civil society and the private sector will be invited to give their opinions on the matter. Interested parties may register at the following link.
OECD will continue to work on the technical basis for the implementation of the 15% global minimum income tax as of 2024. In the meantime, Colombia will seek to build the aforementioned coalition, with the objective that the region will implement such tax but adjusted to the regional reality throughout 2023.
McDonald’s engagement opportunities
The technical development of the global tax is happening through the OECD public consultations in which McDonald’s can contribute its views. Once the tax is technically defined, the national Congresses will have to adapt it to their countries, and in those spaces any private could participate in the discussion in the advisory committees of each legislature. On the other hand, with respect to the Colombian initiative, interested private companies will be able to participate in the May forum to learn more about Colombia’s intentions and provide complementary views.