The United States has often been dominant in multilateral matters.
And when Treasury Secretary Janet Yellen announced - earlier this year - that it was time to end the "global race to the bottom" on corporate tax;
Her remarks sparked intertwined conversations about the possibility of a global deal to adjust the amount of taxes that multinational corporations pay, as they must be paid.
The British newspaper, The Economist, said in its report that the talks focus on two main changes:
Redistribute taxation rights to countries with economic activity, rather than where companies choose to reap profits.
Set a minimum global tax rate that will likely be around 15%.
It is scheduled that the finance ministers from the Group of Seven major industrialized countries declare their approval of these decisions at a meeting to be held on the fourth and fifth of this June.
The broader Group of Twenty agrees on the terms as soon as next July, prompting the other 120 countries and regions - participating in the talks - to agree with each other, while the German Finance Minister predicted on May 26 a "revolution". global tax rules in a few weeks.
Winners and losers
The newspaper added that all revolutions include winners and losers;
In this case, the big economies would be the victor, with multinational corporations generating large proportions of sales while collecting relatively low taxable profit, thanks to tax planning that moves income to low-tax jurisdictions.
This disparity has grown with the emergence of digital giants such as Amazon, Apple and Google, whose assets are arguably largely intangible.
In addition, developing countries in which global companies' factories and other businesses are located will benefit, the paper says.
On the other hand, the benefit is not as much as these companies expect.
The main loser will be tax havens, which have been able - since their emergence more than half a century ago - to benefit increasingly in light of globalization that has made capital more flexible.
These tax havens provided what seemed to them necessary tax competition, and what many others saw as the policy of the economics of the beggar-neighbor, according to the newspaper.
One official closely involved in the current talks believes the deal taking shape could "eliminate havens (Getty Images)
a study
A 2018 study found that about 40% of multinational corporations' offshore profits were artificially transferred to low-tax countries.
One official closely involved in the current talks believes the deal that is taking shape could "eliminate havens".
However, tax havens come in different shapes and sizes, such as tax-free Caribbean islands and low-tax centers in Europe and Asia.
The newspaper pointed out that things look a bit bleak for areas surrounded by palm trees and tax-free, such as Bermuda, the British Virgin Islands and the Cayman Islands.
Although they do not make a profit on corporate tax revenues;
They depend, to varying degrees, on fees paid by subsidiaries of large corporations and cottage industries that include accountants, lawyers, and other service providers who provide their services on a local scale.
According to the newspaper, the revenues collected by these parties are mere crumbs compared to the taxes provided by these companies.
In contrast, its value is significant to such small economies, where corporate and financial services accounted for more than 60% of the revenue of the BVI government in 2018.
Deal
The Joe Biden administration's deal - which would apply the global minimum average to country by country and not as a whole - would kill the business model offered by these havens.
Despite their dissatisfaction;
They are unable to do anything in this regard.
One diplomat stated that the tax havens were about to be "neutered", as they were "not a party" to the talks and "no one wants to listen to them".
In turn, some have other sources of revenue streams;
For example, Cayman is home to hedge funds, while Bermuda is home to insurance companies.
Many EU countries, such as Ireland and Cyprus, have also attracted investment through a low corporate income tax rate (both 12.5% tax rate), or through rules that differentiate their tax structures, as Luxembourg and the Netherlands have done to help companies avoid paying taxes in other countries.
The United States and some other countries can impose minimum taxes on their corporations even without a global deal (Getty Images)
A study - published by the International Monetary Fund in 2019 - found that such "phantom" investment increased Luxembourg's stock of foreign direct investment to $4 trillion, a tenth of the global total.
In addition, Hong Kong and Singapore have benefited from corporate taxes, according to the British newspaper.
Some of the more egregious loopholes fueling these flows have been closed in the past few years, following a deal brokered by the Organization for Economic Co-operation and Development in 2015. Among them is the Irish double, which involves transferring profits to Irish-listed subsidiaries based in Bermuda or The Cayman Islands are home to a tax haven that may have saved Google alone tens of billions of dollars over a decade.
However, Ireland still has a lot to lose as it has come to rely on its 12.5 per cent rate to attract foreign investment, much of which includes real people, offices and factories.
Currently, corporate tax makes up a record 20% of the country's total taxes.
Moreover - the newspaper says - the United States and some other countries can impose minimum taxes on their companies even without striking a global deal.
In fact, the US already has a version of intangible income, although it is set at 10.5%.
In general, the revolution is seen as coming, unless there is an unexpected breakdown in the talks.
However, the golden age of the world's tax havens may be drawing to a close, the paper concludes.