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How will the 15% tax rate affect offshore companies?

01 Aug
How will the 15% tax rate affect offshore companies? CYWORLD WEALTH Adcovate Cyprus

How will the 15% tax rate affect offshore companies?

How will the 15% tax rate affect offshore companies?

Following a new agreement on a global minimum tax rate to prevent large companies from transferring profits to offshore jurisdictions, what will the future hold for individual companies?

The G7 states (UK, Canada, France, Germany, Italy, Japan and the United States) have reached a compromise on setting a minimum 15 percent tax rate for companies, no matter where they do business. This has significantly reduced companies’ requests to open accounts in offshore zones.

While this agreement does make it difficult to use tax havens to reduce the tax burden where companies are headquartered, companies now have to pay additional taxes depending on where their goods or services are sold. This tax must be paid even if companies do not have a physical presence in this country. It should be noted that this agreement does not affect companies without international turnover.

The main goal of the agreement is to encourage countries to compete on corporate tax rates to attract multinational companies and to achieve a level playing field for companies. In addition, the agreement embodies reasonable tax policy objectives and will enable businesses to ensure predictable and timely prevention and resolution of disputes.

Multinational companies around the world use tax codes to redistribute profits and avoid paying taxes that they would otherwise be required to pay. The effective tax rates of many of the largest companies are much lower than those paid by millions of small entrepreneurs. The high rate of tax evasion by large corporations, which is estimated at hundreds of billions of dollars in annual losses worldwide, undermines the competitiveness of small businesses.

We draw your attention to the fact that this article is for informational purposes only. For more advice, contact us at the contacts listed on the site.