Northlines
Uttam Gupta
The Joe Biden Administration is pushing for a Global Corporate Minimum Tax (GCMT) rate under the new international tax rules being coordinated by it with G20 countries. In 2017, the erstwhile Donald Trump Administration had introduced the US corporate offshore minimum tax called the Global Intangible Low-Taxed Income (GILTI). It is applied on the offshore incomes of US multinationals (MNCs) having subsidiaries in low-tax countries, at 10.5 per cent, which is half the Domestic Corporate Tax Rate (DCTR) of 21 per cent. US President Biden wants to double GILTI to 21 per cent and correspondingly increase the DCTR to 28 per cent. The US’ move is prompted by a tendency among MNCs to register in low-tax countries such as Singapore, Mauritius, Ireland and show their revenue and profits in those jurisdictions, regardless of where the sales are made. This enables them to avoid paying higher taxes in the source country. The GCMT is intended to prevent this
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