US Treasury Secretary Janet Yellen has found a new weapon in the fight against offshore companies and tax evasion with their help, writes the Financial Times. She proposed to all countries of the world to introduce a minimum tax on the profits of transnational corporations.
Such a measure, according to Yellen, would make senseless the race of states and jurisdictions for more favorable and attractive conditions for foreign companies. Currently, many of them (not all of them are offshore) have minimal or no income taxes.
This allows companies to register in such countries and generate income for them by paying for the services of local lawyers and registration authorities, as well as avoid paying tax until the profits are repatriated to their home country – to the country of registration of the head office.
In addition, many of these companies act as holding structures designed to hold stakes in firms in the country of original incorporation and receive dividends and interest from them. This becomes possible due to the fact that many countries with preferential regimes have concluded international agreements on the avoidance of double taxation, which can significantly reduce the rate on the withdrawal of capital abroad.
Yellen’s announcement came just days after the announcement of President Joe Biden’s ambitious plan to rebuild the national economy, providing $ 1.9 trillion to citizens, companies and banks. In this regard, the US authorities are looking for new ways to replenish the budget.