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Economy

From Apple To G20: Time For A New Tax World Order

Follow the money, which travels beyond borders more than ever before. But a new paradigm should be about more than just cracking down on evaders.

Apple Headquarters in Cupertino, California
Apple Headquarters in Cupertino, California
Jean-Marc Vittori

PARIS — It’s hard to know whether men really are from Mars and women from Venus. But you can almost be certain that tax collectors live on Uranus and large companies on Saturn, the two Solar System planets furthest from one another.

Let’s start our tour with a visit of the “ice giant.” Uranus needs 84 years to revolve once around the sun, and tax collectors also want to make their revolution in a little under 100 years. They want to break the wonderful corporate tax system created in the 1920s. A wonderful system indeed… for its time. We were then in the waves of what economist Suzanne Berger calls “our first globalization.”

In the previous 50 years, the biggest companies from Germany, the United States, France, established themselves all over the world. After World War I, the penniless nation-states were tempted to tax foreign companies heavily. The biggest companies of the time often paid their taxes twice: for the headquarters and the branches. To avoid a tax war, the League of Nations proposed one principle, namely that tax must be paid only once and at the place of production, which was easy enough to determine in the industrial era.

“Stable establishment” became the founding principle of the taxation of mutinational companies. As decades passed, thousands of bilateral conventions between countries made those rules more precise.

But in today’s digital era, this system is like a broken net. Companies localize their profits — and more and more often their turnover too — in countries where tax is the lowest, like Ireland where profits are taxed at 12.5%. Gulliverian companies pay Lilliputian taxes. And once again penniless after the great recession of 2009, states want to tighten the net around corporations.

The Organisation for Economic Cooperation and Development (OECD), the think-tank of developed countries, has taken on with success the project under the double instigation of its Mexican Secretary-General Angel Gurría and the director of its Centre for Tax Policy and Administration, the Frenchman Pascal Saint-Amans.

Encouraged by real political will and crucial technical support, the project is moving forward fast, unlike for example the international negotiations on environment, which do not benefit from neither of these two resources.

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FOCUS: Russia-Ukraine War

The Dead And Disappeared: A Village Emerges From 72 Days Of Russian Occupation

Russian forces have been pushed out of the area around Kharkiv. Villages that were occupied for two months are free once more — but utterly destroyed. And thousands of people have disappeared without a trace.

Kharkiv and the surrounding villages faced weeks of constant Russian shelling.

Alfred Hackensberger

TSYKRUNY — Andriy Kluchikov uses a walking stick, but is otherwise fairly sprightly for a 94-year-old. Under his black wool hat, Kluchikov seems fearless as he surveys his hometown in northeastern Ukraine. “The missiles don't scare me,” he says with a smile. “I have slept in my own bed every night and never went down into the basement.”

As for the two-meter-wide bomb crater that has appeared in his garden, between the vegetable patch and the greenhouse with its shattered plastic roof, Kluchikov almost seems proud. “No one can intimidate me,” he says. “Not even the Russians.”

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In the early days of the war, in February, Russian artillery almost completely destroyed this village of Tsyrkuny, near Kharkiv, Ukraine's second largest city. Only a few houses, including his own, were left undamaged. Shortly afterwards, Russian troops marched into the village and occupied it for 72 days. It was not until early this week that the Ukrainian army was able to liberate Tsyrkuny and many other areas to the north of the country’s second-largest city, Kharkiv.

It is the Ukrainians’ most successful counter-offensive so far. They are thought to have pushed the invading troops back almost to the Russian border. “The offensive is gaining momentum,” according to the independent American thinktank Institute for the Study of War. “It has forced Russian troops on the defensive and has successfully alleviated artillery pressure on Kharkiv City.”

In the modern city of Kharkiv, home to around 1.5 million residents, the relief has been palpable over the last few days. Restaurants and cafes have reopened. People are walking and riding bikes in the parks, and couples are strolling hand in hand, enjoying the warm spring sunshine. You can still hear the artillery, but it is now many miles away.

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Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.

Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.

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