Our spirit values and code of business ethics and conduct constitute key components of our company culture. This framework underpins our global tax policy and guides how we conduct our tax affairs. Our objective is to maintain procedures and make decisions which are fully compliant with all applicable tax laws in the jurisdictions where we operate. Since becoming one of the world’s largest independent exploration and production companies in 2012, conocophillips has paid over $50 billion in current income and non-income taxes (e. G. , property taxes, severance taxes and payroll taxes). These taxes are paid to numerous jurisdictions around the world supporting the public finances of the countries and communities where we operate.

The oecd/g20 deal should increase tax collection in most countries , which could be a major step forward in supporting the achievement of the sustainable development goals (sdgs). Target 17. 1 of the sdgs, for example, calls upon governments to “strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection. ”this is an important outcome, given that corporate income taxes can provide governments with crucial revenue for achieving public policy objectives. Corporate income tax rates have been declining for decades because of tax competition. Developing countries in particular rely more heavily on corporate income tax revenue , and given the economic toll of the ongoing covid-19 pandemic over the past 2 years, these governments need to find resources to finance better physical and digital infrastructure.

Does the Optimal Tax System Exist?

The international tax system—shaped by the league of nations in april 1923—has come under intense pressure in recent years. Globalization, digitalization, and tax competition have made it increasingly hard for countries to raise revenue from multinational companies in an effective, fair, and efficient manner. Following a decade of debate, 138 countries recently agreed to the first major overhaul of the international tax system in a century. Our new imf paper assesses the reform and finds that it is a major step in the right direction. But to reap its benefits countries need to implement it, with the optimal policy response depending on each country’s circumstances.

It is necessary to address how national tax systems and the existing network of double tax treaties will have to be adapted to fit into this multilateral agreement. Avoidance of double taxation is important. Issues related to the complexities of enforcement and tax collection also need to be addressed. These clarifications are necessary to prevent a significant increase in international tax disputes.

HOW WOULD A DEAL WORK?

The merger & acquisitions team involves the tax team from the beginning of any project. The tax team is involved in any necessary tax due diligence and the overall deal process. Furthermore, tax is an integral workstream in any integration process. No entities are disposed of or liquidated without the involvement of the tax team.

The world is currently at a crossroads of economic uncertainty. Many businesses are finally getting out from underneath the impacts of covid lockdowns and restrictions. Tensions between the world’s economic and military superpowers are higher than they have been in some time. The united states stands on the brink of a catastrophic debt default. Businesses – especially those that operate internationally – have a lot about which to be concerned. Companies should be focused on expanding their businesses rather than an added layer of taxation. Unfortunately, american and global leaders are not pursuing avenues to alleviate this uncertainty or that would create a more business-friendly climate.

Some governments believe that an element of appropriate tax competition should still be allowed by any global minimum tax regime, especially for smaller nations in order to enable them to compete with larger countries that have inherent economic advantages. But the ability to offer tax incentives will be fundamentally impacted by the reach of any global minimum tax regime. We can expect to see a range of responses. It may lead to governments seeking to incentivize through subsidies or grants rather than tax reliefs, although international state aid and anti-subsidy rules might limit this. If the final global minimum rate is closer to 15% than 21%, the effect on tax incentives will be reduced, but they will still be impacted and become less effective.