Shares in US technology giants barely reacted to a landmark global minimum corporate tax deal agreed between the world’s richest nations, with analysts saying it will take the backing of low-tax nations to have any meaningful impact on the companies’ bottom lines.
The Group of Seven (G7) advanced economies agreed on Saturday to back a minimum global corporate tax rate of at least 15 percent and the focus now shifts to the G20 countries for a wider agreement on the new tax proposals.
Analysts say the tax deal wouldn’t hurt companies unless it’s agreed with tax-haven countries such as Ireland, whose economy has been booming with the influx of billions of dollars in investment from multinationals due to lower taxes.
“The details of the implementation are still to be ironed out and potentially further watered down,” said Marija Vertimane, senior strategist at State Street Global Markets.
Dublin, which has resisted European Union attempts to harmonise its tax rules, is unlikely to accept a higher minimum rate without a fight.
“I would treat the current proposal as a small positive for the market,” Vertimane added pointing to levies being lower than what was initially discussed.
The G7’s proposals are seen targeting technology companies that sell services remotely and attribute much of their profits to intellectual properly held in low-tax jurisdictions.
“The immediate market implications are likely to be minimal,” said Ian Williams, economics & strategy research analyst at Peel Hunt.
“No G7 nation currently charges that low a rate and the details, including agreement from numerous smaller countries, require plenty of work.”