Latin America Advisor 2023-02-01 – Inter-American Dialogue

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

February 1, 2023

Will Latin America See Big Gains From Global Tax Reforms?

A global minimum tax is expected to raise hundreds of billions of dollars in revenue. However, Colombian Finance Minister José Antonio Ocampo has said the tax accord doesn’t go far enough. // File Photo: Colombian Government.

Q

Revenue gains from the implementation of a historic agreement to reform the international tax system will be higher than previously expected, according to new OECD analysis released Jan. 17. The proposed global minimum tax is now expected to result in annual global revenue gains of around $220 billion, or 9 percent of global corporate income tax revenues, as opposed to a previous estimate of $150 billion. However, speaking in Davos about the tax accord, Colombian Finance Minister José Antonio Ocampo called for a Latin American regional tax plan that goes further, saying the OECD’s plan is “too limited.” With a year to go before the implementation of the OECD’s tax reforms take effect, what is the state of readiness for their implementation? Will revenue gains be as much as the OECD has forecast? Why have some Latin American countries expressed dissatisfaction with the plan, and will regional efforts such as those proposed by Colombia arrive at alternatives that meet with agreement from all stakeholders?

A

Angel Melguizo, founding partner of Argia and senior non-resident fellow at the Inter-American Dialogue: “The OECD remains the most technically solid and politically open effort to adapt international taxation to the 21st century by designing and implementing global rules for digital services (when users and providers are in different places), as well as a minimum income tax to fight tax evasion. Indeed, the process is slow, in particular on the taxation of businesses. This reflects not only the challenges to align 135 countries and jurisdictions, but also shows that its reach is far from limited. Meanwhile, advances on the second pillar–the establishment of a 15 percent global minimum tax—have been solid. As a consequence,…”

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ABOUT THE LATIN AMERICA ADVISOR

The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.

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Gene Kuleta
Editor
202.463.2920
gkuleta@thedialogue.org

Jack Quinn
Reporter

jquinn@thedialogue.org

Lori Rampani
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board of advisors

Diego Arria
Director,
Columbus Group

Merike Blofield
Professor of Political Science,
University of Hamburg

Devry Boughner Vorwerk
CEO,
DevryBV Sustainable Strategies

Joyce Chang
Global Head of Research,
J.P. Morgan

Marlene Fernández
Corporate Vice President for Gov’t Relations,
Arcos Dorados (McDonald’s)

Peter Hakim
President Emeritus,
Inter-American Dialogue

Donna Hrinak
Director,
Adtalem Global Education

Jon E. Huenemann
Council Member,
GLG Inc.

James R. Jones
Chairman,
Monarch Global Strategies

Craig Kelly
Senior Director,
Int’l Gov’t Relations,
Exxon Mobil

Barbara Kotschwar
Professor of Political Economy,
Georgetown University

John Maisto
Director,
US Education Finance Group

Nicolas Mariscal
Chairman,
Grupo Marhnos

Thomas F. McLarty III
Chairman,
McLarty Associates

Beatrice Rangel
Director,
AMLA Consulting

Ernesto Revilla
Head of Latin American Economics, Citi

Gustavo Roosen
President,
IESA

Andrés Rozental
President, Rozental &
Asociados

Shelly Shetty
Managing Director,
Sovereigns, Fitch

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