After years of conflicts, a historic decision to punish giant companies

After years of conflicts and controversy, the finance ministers of the Group of Seven countries agreed on a decision that many described as historic, which is to impose a profit tax on giant companies or known as "GAFA" - "Google" ("google"), ""Apple" ("Apple")," Facebook, Amazon - After years these companies have avoided responding to Western governments' demand to pay taxes on their real profits.

Reaching this decision was not easy, as it descended cold and peace on treasury officials in rich countries, while it was like a thunderbolt on major companies.

In this article, we explain, through the opinion of experts in international economics, the importance of this decision, how this tax will be calculated, and will the consumer be affected by this tax, and who will gain and lose from it?

How do giant corporations tax their profits?

The method of tax payment by these companies is resented by the major countries, and Nihad Ismail, professor of economics at the University of London, provides an example of this through Amazon, which achieved profits in Britain alone exceeding 19 billion dollars, and it was supposed to pay about 2.8 billion Taxes were taxed on these profits, but they only paid $290 million.

Why do giant corporations pay a low tax on profits?

The answer is provided by the economist, Dr. Nasser Qaloun, that these companies were “circumventing” the law, by registering their office in one of the tax havens (there are 60 in the world), while their activities are in one of the major financial centers, and thus all their profits are transferred to these havens and are not paid Any tax on them, and the second way is that the founders, executives and senior officials in these companies, decide for themselves low salaries, while allocating for themselves incentives and shares on which they do not pay any tax.

Why did the major countries allow these practices in the past?

Dr. Nihad Ismail says that the major countries in the past entered the so-called "race to the bottom", which means that each country was providing major tax incentives to these companies to persuade them to change their headquarters, because these companies create thousands of jobs.

The second factor is the American position, which was opposed to imposing taxes on these companies, which are mostly American, and the US administration was threatening to enter into a tax war with any country that imposes a tax on these companies.

What is the nature of the new tax that has been agreed upon?

According to Dr. Nihad Ismail, the Group of Seven countries decided to impose a profit tax on these companies at a rate of 15%, which is lower than the rate previously promised by US President Joe Biden (21%), however, the G-20 summit must be awaited next month to ratify the This decision, which will mean the end operations of tax havens, and the same speaker believes that what is described as the tax committee has ended and is no longer feasible, and therefore this decision is considered historic.

Who benefits the most from these taxes?

From the point of view of Dr. Nasser Qalawun, the biggest winner is the treasuries of the major countries that will receive tax revenues in the billions in the event of this tax being approved, considering that the credit is largely due to the Corona epidemic, which made all countries of the world suffer from high indebtedness, trade deficit and the need for tax revenues, and you will not find These countries are better than the giant companies that were not affected by the pandemic, but rather increased their profits, and are able to provide billions to the coffers of countries.

The Group of Seven countries decided to impose a profit tax on GFA companies at a rate of 15% (Getty Images)

Will the consumer who buys the products of the giant companies be affected?

Dr. Nasser Qalawun rules out that the consumer will be directly affected by the imposition of this tax or feel the high prices of the services of these companies, because this tax will be imposed gradually, and it can be reviewed every two years, and these companies have a monopoly in the market, and recently Google paid a fine of $324 million in France due to monopolistic business practices.

What stages will this tax pass before it is approved?

There are 3 important stations that must be awaited, according to Zakaria Karti, the financial officer of an international financial institution, which are: the G20 summit next month, as well as the meeting of the Economic Cooperation Organization. Waiting for the approval of the US Congress, which will be considered a green light for the world to proceed with this tax.

Will the giant corporations accept this tax?

Zakaria Karti expects that these companies will not show much resistance to this tax, not because of their weak influence, but because the percentage is a compromise, given that some votes were calling for 25%, in addition to the fact that the political decision in the United States of America - especially by President Biden - He insists on imposing this tax, which is why these companies will prefer not to engage in a confrontation with the US administration.