{"text":[[{"start":9.14,"text":"Donald Trump was widely expected to launch a tariff war as soon as he returned to office. "},{"start":14.119,"text":"In the event, the first shots in his war on the globalised economy happened on quite a different front. "},{"start":19.349,"text":"In his flurry of orders and memos this week, Trump definitively withdrew already shaky US support for the global compromise on taxing the profits of multinational corporations, a reform painstakingly worked out over the past decade. "},{"start":31.742,"text":"He also threatened punitive retaliation on any country levying “extraterritorial” or “discriminatory” taxes on US multinationals. "}],[{"start":39.18,"text":"The new administration’s challenge to the global deal is bad news all round. "},{"start":43.572,"text":"In the aftermath of the global financial crisis, it was clear to cash-strapped governments and their taxpayers that the old web of bilateral treaties designed to avoid double taxation increasingly facilitated double non-taxation for multinational companies. "},{"start":56.489000000000004,"text":"The ability to avoid tax by allocating profits in low-tax jurisdictions was not politically or financially sustainable. "}],[{"start":64.02,"text":"This problem affected the US, too. "},{"start":66.937,"text":"Domestic rules making it easy to park accounting profits in tax havens reduced the US tax take and discouraged companies from investing or redistributing their funds at home. "},{"start":75.917,"text":"That is why, ironically, the first Trump administration helped drive reform forward. "},{"start":81.14699999999999,"text":"Much early political lifting was done by the then Treasury secretary Steven Mnuchin and his French counterpart. "}],[{"start":87.72,"text":"Agreement on profit-sharing and a minimum corporate tax rate was reached in 2021, but failed to be passed by Congress under the Biden administration. "},{"start":95.912,"text":"Some of the reforms are already being implemented in many countries, however, potentially boosting global tax revenues by roughly $200bn. "}],[{"start":105.18,"text":"The US interest in reform had been prompted by other countries rebelling against the presence of large US businesses — in particular tech companies — that paid vanishingly little in tax. "},{"start":115.05900000000001,"text":"The UK, France, Italy and others passed laws to levy digital services taxes on such companies’ local revenues. "},{"start":122.02700000000002,"text":"Turnover taxes are typically not covered by tax treaties, and they incurred Washington’s ire. "},{"start":127.09400000000001,"text":"When the international tax deal was struck, these countries offered not to levy their DSTs in order to facilitate a multilateral approach. "}],[{"start":135.02,"text":"US withdrawal from the reform will first of all hurt America itself. "},{"start":139.287,"text":"Other countries may continue to apply the global minimum tax rule against US companies or decide to reactivate their DSTs, unless Trump somehow bullies them into submission. "},{"start":148.579,"text":"If he manages to torpedo the rules’ adoption by the rest of the world as well, we would return to the under-taxation of the past, with the same incentives for US and other multinationals to salt away profits offshore. "}],[{"start":160.47,"text":"A better outcome is conceivable. "},{"start":162.787,"text":"The EU has said it aims to hold discussions with the new administration on how to achieve the goal of ensuring effective minimum taxation of multinationals. "},{"start":170.554,"text":"Even if a change of heart seems unlikely in the White House, other countries should strive to tax multinationals’ profits sensibly within a coalition of the willing. "},{"start":178.697,"text":"They have a number of options to deal with the US and other non-collaborating nations. "},{"start":183.064,"text":"Countries with DSTs could simply let the levy work; those without could introduce one. "},{"start":187.807,"text":"A co-ordinated approach at the EU level could be pursued, although that would not be straightforward. "},{"start":192.787,"text":"The repercussions if the Trump administration retaliated, meanwhile, could be grave. "}],[{"start":198.21,"text":"Trump has threatened both tariffs and punitive US taxes on citizens and companies from countries that defy his demand. "},{"start":204.627,"text":"Those countries are not powerless to push back. "},{"start":207.31900000000002,"text":"But the stakes are high. "},{"start":208.912,"text":"With a stroke of a pen, Trump has raised the risk that a whole web of cross-border investment stakes might be unwound. "}],[{"start":214.97,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/189786-1737591327.mp3"}