Corporate Taxes Poised to Rise After 136-Country Deal

 
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Nearly 140 countries agreed Friday to the most sweeping overhaul of global tax rules in a century, a move that aims to curtail tax avoidance by multinational corporations and raise additional tax revenue of as much as $150 billion annually.

But the accord, which is a decade in the making, now must be implemented by the signatories, a path that is likely to be far from smooth, including in a closely divided U.S. Congress.

The reform sets out a global minimum corporate tax of 15%, targeted at preventing companies from exploiting low-tax jurisdictions.

Treasury Secretary Janet Yellen said the floor set by the global minimum tax was a victory for the U.S. and its ability to raise money from companies. She urged Congress to move swiftly to enact the international tax proposals it has been debating, which would help pay for extending the expanded child tax credit and climate-change initiatives, among other policies.

“International tax policy making is a complex issue, but the arcane language of today’s agreement belies how simple and sweeping the stakes are: when this deal is enacted, Americans will find the global economy a much easier place to land a job, earn a living, or scale a business,” Ms. Yellen said.

The agreement among 136 countries also seeks to address the challenges posed by companies, particularly technology giants, that register the intellectual property that drives their profits anywhere in the world. As a result, many of those countries established operations in low-tax countries such as Ireland to reduce their tax bills.

The final deal gained the backing of Ireland, Estonia and Hungary, three members of the European Union that withheld their support for a preliminary agreement in July. But Nigeria, Kenya, Sri Lanka and Pakistan continued to reject the deal.

The new agreement, if implemented, would divide existing tax revenues in a way that favors countries where customers are based. The biggest countries, as well as the low-tax jurisdictions, must implement the agreement in order for it to meaningfully reduce tax avoidance.

Overall, the OECD estimates the new rules could give governments around the world additional revenue of $150 billion annually.

The final deal is expected to receive the backing of leaders from the Group of 20 leading economies when they meet in Rome at the end of this month. Thereafter, the signatories will have to change their national laws and amend international treaties to put the overhaul into practice.

The signatories set 2023 as a target for implementation, which tax experts said was an ambitious goal. And while the agreement would likely survive the failure of a small economy to pass new laws, it would be greatly weakened if a large economy—such as the U.S.—were to fail.

“We are all relying on all the bigger countries being able to move at roughly the same pace together,” said Irish Finance Minister Paschal Donohoe. “Were any big economy not to find itself in a position to implement the agreement,  that would matter for the other countries. But that might not become apparent for a while.”

 

Congress’ work on the deal will be divided into two phases. The first, this year, will be to change the minimum tax on U.S. companies’ foreign income that the U.S. approved in 2017. To comply with the agreement, Democrats intend to raise the rate—the House plan calls for 16.6%—and implement it on a country-by-country basis. Democrats can advance this on their own and they are trying to do so as part of President Biden’s broader policy agenda.

The second phase will be trickier, and the timing is less certain. That is where the U.S. would have to agree to the international deal changing the rules for where income is taxed. Many analysts say that would require a treaty, which would need a two-thirds vote in the Senate and thus some support from Republicans. Ms. Yellen has been more circumspect about the schedule and procedural details of the second phase.

Friction between European countries and the U.S. over the taxation of U.S. tech giants has threatened to trigger a trade war.

In long-running talks about new international tax rules, European officials have argued U.S. tech giants should pay more tax in Europe, and they fought for a system that would reallocate taxing rights on some digital products from countries where the product is produced to where it is consumed.

The U.S., however, resisted. A number of European governments introduced their own taxes on digital services. The U.S. then threatened to respond with new tariffs on imports from Europe.

The compromise was to reallocate taxing rights on all big companies that are above a certain profit threshold.

Under the agreement reached Friday, governments pledged not to introduce any new levies and said they would ultimately withdraw any that are in place. But the timetable for doing that has yet to be settled through bilateral discussions between the U.S. and those countries that have introduced the new levies.

Even though they will likely have to pay more tax after the overhaul, technology companies have long backed efforts to secure an international agreement, which they see as a way to avoid a chaotic network of national levies that threatened to tax the same profit multiple times.

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The Organization for Economic Cooperation and Development, which has been guiding the tax talks, estimates that some $125 billion in existing tax revenues would be divided among countries in a new way.

Those new rules would be applied to companies with global turnover of €20 billion (about $23 billion) or more, and with a profit margin of 10% or more. That group is likely to include around 100 companies. Governments have agreed to reallocate the taxing rights to a quarter of the profits of each of those companies above 10%.

The agreement announced Friday specifies that its revenue and profitability thresholds for reallocating taxing rights could also apply to a part of a larger company if that segment is reported in its financial accounts. Such a provision would apply to Amazon.com Inc.’s cloud division, Amazon Web Services, even though Amazon as a whole isn’t profitable enough to qualify because of its low-margin e-commerce business.

The other part of the agreement sets a minimum tax rate of 15% on the profits made by large companies. Smaller companies, with revenues of less than $750 million, are exempted because they don’t typically have international operations and can’t therefore take advantage of the loopholes that big multinational companies have benefited from.

Low-tax countries such as Ireland will see an overall decline in revenues. Developing countries are least happy with the final deal, having pushed for both a higher minimum tax rate and the reallocation of a greater share of the profits of the largest companies.

 
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Climate Crisis: Scientists Spot Warning Signs of Gulf Stream Collapse

Climate scientists have detected warning signs of the collapse of the Gulf Stream, one of the planet’s main potential tipping points.

The research found “an almost complete loss of stability over the last century” of the currents that researchers call the Atlantic meridional overturning circulation (AMOC). The currents are already at their slowest point in at least 1,600 years, but the new analysis shows they may be nearing a shutdown.

Such an event would have catastrophic consequences around the world, severely disrupting the rains that billions of people depend on for food in India, South America and West Africa; increasing storms and lowering temperatures in Europe; and pushing up the sea level off eastern North America. It would also further endanger the Amazon rainforest and Antarctic ice sheets.

The complexity of the AMOC system and uncertainty over levels of future global heating make it impossible to forecast the date of any collapse for now. It could be within a decade or two, or several centuries away. But the colossal impact it would have means it must never be allowed to happen, the scientists said.

“The signs of destabilisation being visible already is something that I wouldn’t have expected and that I find scary,” said Niklas Boers, from the Potsdam Institute for Climate Impact Research in Germany, who did the research. “It’s something you just can’t [allow to] happen.”

It is not known what level of CO2 would trigger an AMOC collapse, he said. “So the only thing to do is keep emissions as low as possible. The likelihood of this extremely high-impact event happening increases with every gram of CO2 that we put into the atmosphere”.

Scientists are increasingly concerned about tipping points – large, fast and irreversible changes to the climate. Boers and his colleagues reported in May that a significant part of the Greenland ice sheet is on the brink, threatening a big rise in global sea level. Others have shown recently that the Amazon rainforest is now emitting more CO2 than it absorbs, and that the 2020 Siberian heatwave led to worrying releases of methane.

The world may already have crossed a series of tipping points, according to a 2019 analysis, resulting in “an existential threat to civilization”. A major report from the Intergovernmental Panel on Climate Change, due on Monday, is expected to set out the worsening state of the climate crisis.

Boer’s research, published in the journal Nature Climate Change, is titled “Observation-based early-warning signals for a collapse of the AMOC”. Ice-core and other data from the last 100,000 years show the AMOC has two states: a fast, strong one, as seen over recent millennia, and a slow, weak one. The data shows rising temperatures can make the AMOC switch abruptly between states over one to five decades.

The AMOC is driven by dense, salty seawater sinking into the Arctic ocean, but the melting of freshwater from Greenland’s ice sheet is slowing the process down earlier than climate models suggested.

Boers used the analogy of a chair to explain how changes in ocean temperature and salinity can reveal the AMOC’s instability. Pushing a chair alters its position, but does not affect its stability if all four legs remain on the floor. Tilting the chair changes both its position and stability.

Eight independently measured datasets of temperature and salinity going back as far as 150 years enabled Boers to show that global heating is indeed increasing the instability of the currents, not just changing their flow pattern.

The analysis concluded: “This decline [of the AMOC in recent decades] may be associated with an almost complete loss of stability over the course of the last century, and the AMOC could be close to a critical transition to its weak circulation mode.”

Levke Caesar, at Maynooth University in Ireland, who was not involved in the research, said: “The study method cannot give us an exact timing of a possible collapse, but the analysis presents evidence that the AMOC has already lost stability, which I take as a warning that we might be closer to an AMOC tipping than we think.”

David Thornalley, at University College London in the UK, whose work showed the AMOC is at its weakest point in 1,600 years, said: “These signs of decreasing stability are concerning. But we still don’t know if a collapse will occur, or how close we might be to it.”

By: Environment editor

Source: Climate crisis: Scientists spot warning signs of Gulf Stream collapse | Climate change | The Guardian

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Brexit Tensions In Ireland As Supermarket Shelves Sit Empty

When it comes to Brexit on the island of Ireland, the optics matter. And in the last couple of weeks, they haven’t been great. 

Supermarket shelves sitting empty in the North; log-jammed lorry parks in the South. 

A piece of Brexit paperwork — the Northern Ireland protocol — is to blame. Designed to avoid the return of commercial checkpoints across the island, the protocol sees Northern Ireland remain aligned with the EU single market, allowing goods to pass freely to-and-from the Irish Republic. 

The catch: an effective customs border between Great Britain and Northern Ireland down the Irish Sea. This has slowed — and in some cases, curtailed — the flow of deliveries to Belfast, Ballymena, and beyond. At Dublin Port, through which a significant chunk of the North’s trade passes, freight is moving at a glacial pace.

A catalogue of new documentary checks lurk behind the slowdown. With Brexit, U.K. businesses selling to the EU (and vice versa) must make import and security declarations, confirming the origin of their products. The frictionless trade that has underpinned U.K.-Ireland commerce for a quarter-century is well and truly gone.

When it comes to the movement of food, this is particularly true. Items of plant and animal origin are subject to an added layer of regulatory checks, with veterinary inspectors required to certify a consignment’s contents. This can be a cumbersome process — hence the sorry sight of empty supermarket shelves.  

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It is but “teething problems,” said Prime Minister Boris Johnson; a slightly rough ride in the first official fortnight of Brexit. 

The U.K.’s top supermarket chains don’t exactly agree. An “urgent intervention” is needed to prevent further disruption to Northern Ireland’s food supply, the heads of Tesco, Sainsbury’s, Asda, Iceland, Co-Op and Marks & Spencer told the government this week. 

There are particular concerns around what happens in April when more strenuous tests on food and agricultural products come into force. At that juncture, it may prove uneconomic for stores to operate in Northern Ireland, raising the spectre of price hikes, or even closures.

That seems unlikely, though — the Brexit process has been pockmarked with challenges, but a solution is almost always found. Indeed, though unsettling, the reports of empty shelves weren’t ubiquitous, and it seems shoppers weren’t put at too great an inconvenience.

But the episode belies a deeper issue.

Ireland, commercially speaking, is no longer split North-South but East-West, with a line drawn between the island and Great Britain. That’s hugely symbolic.   

While Brexit has undoubtedly inflamed age-old political divides in Ireland, there’s little question that the island is now more economically united than at any other time in the last century.

Small wonder the co-ruling Democratic Unionist Party (DUP) — who, this year, will celebrate one hundred years of Northern Ireland’s continued place within the U.K. — was incandescent at the supermarket debacle. 

“[The protocol] has ruined trade in Northern Ireland and it’s an insult to our intelligence to say it’s a teething problem,” fumed DUP lawmaker Ian Paisley Jr in parliament on Wednesday.

His party is pushing for the activation of Article 16 — a safeguard that allows the U.K. (or EU) to act unilaterally if measures imposed as a result of the protocol are deemed to be causing “serious economic, societal or environmental difficulties.” The government has said it won’t hesitate to do so if required, but argues that there hasn’t yet been the need. 

Northern Ireland’s Nationalist movement would tend to agree. Triggering Article 16 would be reckless, senior Sinn Féin figures have said, while Stephen Farry, deputy leader of the Alliance Party, this week dismissed DUP fears that schools and hospitals might face food shortages as “scaremongering on steroids.” 

Whether that’s right or wrong — and even if commercial hurdles are cleared in the coming months — Brexit’s constitutional ramifications for Ireland are gathering pace. Follow me on Twitter or LinkedIn. Check out some of my other work here.

Alasdair Lane

 Alasdair Lane

I’m a U.K.-based journalist who’s worked at the sharp end of political broadcasting in Westminster, experienced the Brexit brouhaha up close, and interviewed some of the biggest names in U.K. and European policymaking. After a stint as editor of my undergraduate student newspaper, I found myself in London writing for, among others, The Independent. 

As the 2015 General Election approached, I took on a producer role at Sky News, working across the channel and on multiple platforms. Inspired by the heady political times, I moved to Sky’s Westminster studio shortly after, becoming a political news editor. 

The intense, fast-paced posting saw me direct the daily political coverage, produce content going out live, and interview some of the era’s biggest political hitters. 

Returning to my writing roots, I continue to focus on British and E.U. politics, as well as dabbling in wider foreign affairs.

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Daily Mail

Chief executives of Tesco, Sainsbury’s, Asda, Iceland, Co-Op and Marks & Spencer have written to Cabinet Office Minister Michael Gove. Depleted shelves have been seen in several supermarkets in the early days of the new year as trade from Britain has been affected while firms adjust to new requirements on moving produce across the Irish Sea. Export health certificates are required for animal-based food products moving from Britain into Northern Ireland as a result of the region remaining in the EU’s single market for goods. Original Article: http://www.dailymail.co.uk/news/artic… Original Video: http://www.dailymail.co.uk/video/news… Daily Mail Facebook: http://facebook.com/dailymail Daily Mail IG: http://instagram.com/dailymail Daily Mail Snap: https://www.snapchat.com/discover/Dai… Daily Mail Twitter: http://twitter.com/MailOnline Daily Mail Pinterest: http://pinterest.co.uk/dailymail Daily Mail Google+: https://plus.google.com/+DailyMail Get the free Daily Mail mobile app: http://dailymail.co.uk/mobile

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A Funeral and a Turf War – Cheri Lucas Rowland

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The newspaper clipping is yellowed with age but carefully folded and preserved in a box of papers left by my Irish grandmother. The box was inside a larger one with an assortment of family papers that sat in the back of my closet for more than two decades. I would have opened it far sooner if I had known all the little treasures and poignant stories held within: my father’s British Army ID card, congratulations telegrams sent to my parents on their wedding day in 1947, my Flemish grandmother’s passport stamped with all her visits to England when I was small, annual receipts my Irish grandmother kept for the upkeep of the grave of the baby she lost to pneumonia before my father was born. The yellowed newspaper clipping my grandmother kept so carefully all her life was the announcement of her father Hugh Carney’s death in 1913.

It was just last year, preparing for my first visit to Ireland, that I learned the identity of my great-grandparents. My grandmother never spoke about Ireland or her family. All I knew was her maiden name and that she and my grandfather both came from Knock in County Mayo in the west of Ireland. But through the wonders of online genealogical research I was able to discover my entire family tree. By the time I drove into Knock I had a map of the Old Cemetery marked with the locations of my great-grandparents’ graves. But if only I had opened that box first and found the newspaper clipping I would have saved a lot of research time. The announcement lists the names and relationships of all the extended family who attended the funeral service. There is my grandmother’s name, Bridget, daughter.

The language of the announcement is lovely, the cadence magisterial and dignified like the prose of a nineteenth century novel:

“Amid many manifestations of deep and sincere regret the remains of the above named much esteemed deceased were laid to rest in Knock cemetery Monday 20th October…fortified and consoled by the ministrations of God’s Holy Church and perfectly resigned to the will of His Divine Master he breathed his last on the morning of Saturday 18th October, surrounded by all those who were nearest and dearest to him on earth…his death was happy, peaceful, and holy and edifying as his life. An honest, upright, and devout Christian, a model husband and father, and a kindly and charitable neighbour, we pray that his long last sleep be calm and peaceful and that his awakening shall be immortal and glorious…The interment took place immediately after Mass and was attended by an immense concourse of people. The adjoining parishes and towns, as well as his own native parish of Knock were largely represented, and afforded incontestable evidence of the widespread regard and high esteem entertained for deceased and the members of his family.”

My grandmother went on to endure a troubled, unhappy marriage and was eventually left alone to raise her youngest son, my father. So the phrase “model husband and father” jumps out at me. Hugh Carney was evidently that ideal and it is a measure of his youngest daughter’s devotion that she kept this account of his death with her for the rest of her long life.

I was thrilled to find this lost piece of family history, but when I turned the clipping over to see if there was some clue to the name of the newspaper, I found so much more. A court report that reads like a little gem of a short story or one-act play that could have come from the pen of one of Ireland’s classic authors. Headlined A Title Case, it concerns a dispute over the ownership of a piece of bogland, giving us a glimpse into traditional Irish rural life.

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The ownership of a piece of bog was no small matter for the peat or turf that Irish farmers dug out was their sole source of fuel for heating and cooking. Formed of dead and decaying vegetation in wet spongey earth unsuitable for agriculture, the peat was cut and piled to dry, the stacks a familiar sight in the Irish countryside. The burning peat slices gave a distinctive sweet smell to the smoke wafting from cottage chimneys.

 

The ancient rights of turbary, the right to cut turf from a particular area of bog, were jealousy guarded. So John Blowick of Belcarra sued John Carney and his son James of Elmhall (no relations as far as I know) to recover five pounds damages for trespassing on his bog. The report continues:

“Mr. Verdon for the plaintiff.
Mr. H. P. Howdy defended.
Mr. M. Moran, C.E. produced a map of the locus in quo on behalf of the plaintiff.
Mr. Blowick was examined and said the defendants commenced cutting turf on his bog on the 15th July. Witness paid rent for this bog and always used it.”

There follows some confusing and contradictory testimony. Two witnesses stated they had never seen the Carneys cutting turf on that piece of bog, Mr. Blowick was the only one who ever used it. But when it came time for the defendant to testify:

“John Carney said he had two holdings at Belcarra and he had a right to turbary attached to them. The landlord’s agent pointed him out the place to cut his turf, and he had been using the bog in dispute for the past 45 years.”

Hmm. He claimed he had been cutting turf there for 45 years but two witnesses had never seen him there in all that time. Then another character is introduced, one Edward Loftus.

“Loftus said he had a portion of this bog and gave up his portion to Mr. Blowick. Carney had another portion of this particular bog and always used it and Blowick had never any rights on it.”

Things are becoming tangled indeed. Another witness, James Heneghan, said he saw the Carneys cutting turf on this bog for the past 35 years. Then we hear from Mr. George H. Garvey, Assistant County Surveyor, who could perhaps be considered an expert witness. But instead of relating his testimony, the report states cryptically “he proved a man of the place for the defence.”

More contradictions follow:

“ Mr. Blowick was recalled and in reply to his Honor denied that Loftus ever gave him up a strip of bog.”

If the reader is confused, then so too was the judge. In fact he just threw up his hands. The report concludes:

“His Honor said he could not make up his mind that Blowick had established his claim to the place, and he would dismiss the case without prejudice  He allowed 30s expenses.”

It’s like a Waiting for Godot set in a bog in which Vladimir and Estragon are replaced by Irish tenant famers all talking at cross purposes, truth as slippery as the peaty mud at their feet. And the English authorities unable to make any sense of it all. A fine metaphor for what would happen in Ireland in the decade following 1913.

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I never spoke to my Irish grandmother about anything important when I was growing up. She was a quiet, sad old lady who spent a lot of time praying the rosary. Now I wish I could thank her for leaving this flimsy little slip of newspaper that carried tales of death and life into the future for me to find.

 

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