Global minimum tax deal set to cut S&P 500 profits from 1% to 2%



The 15% minimum corporate tax rate agreed Thursday by 130 countries will have a limited impact on large U.S. corporations, analysts say.

Why is this important: Large companies with sophisticated accounting services exploit generous tax policies abroad in their efforts to minimize taxes and maximize profits.

How it works: The minimum tax will apply to large multinational companies. Any profitable business with revenues exceeding 20 billion euros ($ 24 billion) will be included upfront, with that number expected to drop to 10 billion euros ($ 12 billion) over time.

  • The rules will be transposed into domestic law in 2022 and enter into force in 2023.

What they say : In an analysis released on June 7, Goldman Sachs analysts estimated that a global minimum tax rate of 15% that came into effect in 2022 “would represent a disadvantage of only 1% to 2%” to S&P 500 earnings.

  • “At the sector level, information technology and healthcare would face the greatest risk of profits, but even these sectors appear to face an overall decline of less than 5% from current consensus estimates,” said they wrote.

And after: Large companies will begin reporting their second quarter financial results in the coming weeks. Expect at least some executives to answer questions about the impact of a global minimum tax on earnings.



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