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Global Tax Reality or Fantasy? Bitcoin stuck in a range

US stocks declined as investors grew nervous over a global minimum tax rate, taper fears remain following hawkish comments from Treasury Secretary Yellen, and as meme stock mania enters its third wild week.

Biogen shares soared after its Alzheimer drug Aduhelm (aducanumab) won FDA approval, the first new treatment for Alzheimer’s disease in nearly two decades.  Apple’s Worldwide Developers Conference didn’t deliver any major surprises.  Apple announced its new iOS updates, major improvements with FaceTime, and enhanced privacy reporting.

G-7 agree on multinational tax

The world just got a lot closer to a global minimum tax rate after the G-7 agreed on a minimum tax of at least 15% which paves the way to tax the profits of digital companies.  The next step is for the G-20 to discuss the proposed global tax rate in early July.  Resistance from tax haven countries such as Ireland is expected, but that might not matter if the majority of large developing countries approve the global tax.

Even if G-20 supports the global tax rate, the US can’t sign off the global tax without Congressional support, which could see resistance from antitax GOP members.  A lot needs to go right for this new tax to get implemented, which seems at the earliest would be around 2023.

It appears that Amazon, who has a profit margin around 5.5%, well below the 10% proposed threshold, won’t be exempt to the proposed global tax.  If this global minimum tax rate was a baseball game, they’d be in the bottom of the second inning.

Cryptos

Bitcoin shrugged off weekend pressure that stemmed from the acceleration in the crypto crackdown in China.  The microblogging platform Weibo restricted around a dozen popular cryptocurrency accounts over the weekend.  This is not the first Weibo banned accounts but has helped many crypto traders anticipate further actions from Beijing.

The news however is not all negative for cryptocurrencies, El Salvador is poised to become the world’s first country to adopt bitcoin as legal tender.  El Salvador, like many LATAM countries, pays significant fees with international transfers, so the embracement of cryptos should not come as a surprise.

Bitcoin continues to stabilize between the USD30,000 and USD40,000 and that should be healthy for the entire crypto market as a whole.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya