Shares in U.S. technology giants barely reacted to a landmark global minimum corporate tax deal agreed between the world’s richest nations. The analysts on the other hand says that it will take the backing of low-tax nations to have any meaningful impact on the company’s bottom lines.
The Group of Seven (G7) advanced economies agreed to back a minimum global corporate tax rate of at least 15%. The focus now shifts to the G20 countries for a wider agreement on the new tax proposals. The tax deal wouldn’t hurt companies, says the analysts. This is 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. Shares of Facebook, Amazon, Apple, Microsoft and Google-parent Alphabet were all down between 0.4% and 0.7%. Europe’s tech stocks index was flat.
Marija Vertimane, senior strategist at State Street Global Markets said that the details of the implementation are still to be ironed out and potentially further watered down. He added that he would treat the current proposal as a small positive for the market, this adds pointing to levies being lower than what was initially discussed. Dublin is unlikely to accept a higher minimum rate without a fight. Technology companies that sell services remotely and attribute much of their profits to intellectual properly held in low-tax jurisdictions, are being targeted by the G7’s proposals.
Ian Williams, economics & strategy research analyst at Peel Hunt said that the immediate market implications are likely to be minimal. And also added that no G7 nation currently charges that low a rate and the details. This includes agreement from numerous smaller countries and also requires plenty of work.