This is a thought leadership Article by PrimeGlobal member firm SingerLewak LPP that discusses effective measures to raise corporate taxes during the COVID-19 pandemic.
As of July 19th, 2020, the toll of COVID-19 has reached 3.9 million confirmed cases and 143,000 deaths in the United States alone. This pandemic has not only been a health disaster, but it has had a devastating effect on the world economy as well. Although the U.S. government passed the CARES Act in order to provide a $2.2 trillion stimulus package to mitigate this economic disaster, many policy makers believe responsibility should be shared by large international corporations as well.
A June 15th report by the Independent Commission for the Reform of International Corporate Taxation (ICRICT) suggests that governments should apply a higher tax rate to large corporations in oligopolised sectors with high rates of return. Moreover, a minimum effective corporate tax rate of 25% on worldwide income can stop multi-national firms from eroding tax bases and shifting profits. This would help prevent the economic burden of the pandemic being placed disproportionately on the most vulnerable.
The report also suggests that multinational enterprises in the technology sector should pay a progressive digital services tax on income generated from the “digital economy” which involves user-based activities such as online advertising, online marketplaces, and data transfer service. This has been adopted by a number of countries and being considered by many more.
Additional suggestions by the ICRICT include country-by-country reporting for all corporations receiving government support, as well as publishing of data on offshore wealth to enable jurisdictions to monitor income tax rates and consider wealth taxes on individual taxpayers.
How? Perhaps this would be implemented through the cooperation of OECD. Corporations already enjoy certain privileges such as limited liability for their owners and public support during economic crises. A series of tax reforms should be implemented to ensure that all pay their fair share.
Why? We are still in the first wave of this pandemic and things will only worsen from here. Time is of the essence. National governments must act swiftly and effectively in order to address both the health and economic crises.
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SingerLewak is a public accounting firm focused on serving clients by being nimble, service-oriented and technically proficient. We are headquartered out of the Westwood, Los Angeles office with another nine offices spread throughout California, from the Bay area to Orange County and the Inland Empire. We also have expanded to Denver, Colorado and are looking to grow within the Northwest region. Serving clients since 1959, SingerLewak has built a reputation for excellence by providing expertise in accounting, tax and advisory services. We work in all industries from technology, life sciences, manufacturing and distribution, construction, services and entertainment. We are able to help companies grow, whether it is an early stage medical device company located in San Jose to raising capital through the public markets through a Regulation A offering, or an initial public offering to offering services to help a company get sold with the right team and technical experience to the appropriate strategic buyer or financial sponsor. The breadth of services that we provide mirror that of a national firm in key business sectors and industry specializations from providing bookkeeping services, state and local tax advice, high net worth individual concierge services to the attest and taxation services that are the foundation of our services.Learn more