Asia will be right in the thick of an oncoming tax war with the US
Where should US companies pay their taxes? Regardless who you ask, the answer seems to be ‘here’, since every taxman in the world thinks Silicon Valley owes them taxes
2018 begins with a rare moment of accomplishment for US President Donald Trump’s administration: The United States is verging on the nation’s biggest overhaul of its tax code for a generation, which will radically cut taxes on profits by US multinationals that repatriate their overseas earnings back to the US.
Since many of these profits are currently re-invested in Asia or Europe, the consequences are worrying for finance ministers across both continents.
At the same time, Asian and European governments themselves have been lobbying for a change in how multinationals – and in particular internet companies – should be taxed.
It seems Asia and the US are on the verge of a war over the question of where US companies should pay their taxes. Regardless who you ask, the answer seems to be “here”, since every taxman in the world – in Paris, Bangkok or the US Inland Revenue Service – thinks Silicon Valley owes them taxes.
But the fact is all exporters are required to pay most of their taxes in one place – at home.
