NEW DELHI: While the US is leading an international effort to create a global minimum tax on corporate profits, India Inc says the move will have not have any impact on India.
On Monday, US Treasury Secretary Janet Yellen called for a global minimum tax that would apply to multinational corporations, regardless of where they locate their headquarters.
“Together, we can use a global minimum tax to make sure the global economy thrives based on a more level-playing field in the taxation of multinational corporations,” she said, adding that it would prevent a “race to the bottom” in which countries cut tax to entice companies.
She said this is aimed at “making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises.”
With the EU and the IMF also supporting the move, experts believe countries like India that have cut tax to attract multi-national companies would come under pressure to raise rates.
On September 20, 2019, India had announced a massive tax rate cut, lowering the base corporate tax rate to 22% from 30%, and to 15% from 25% for new manufacturing companies.
However, India Inc thinks it is not an easy idea to implement.
“It is easier said than done. It will be like asking countries to give up their global competitive edge,” said a senior member of the Confederation of Indian Industry.