US Treasury Secretary Janet Yellen is expected to pressure her G20 counterparts for a global minimum corporate tax rate above the 15 percent floor that 130 countries agreed to last week.
U.S. Treasury Secretary Janet Yellen will press her Group of 20 (G20) counterparts this week for a global minimum corporate tax rate above the 15% floor to which 130 countries have voted. agreed last week, but a rate decision is not expected until later stages of negotiations, US Treasury Department officials said Tuesday.
The specific rate and potential exemptions are among the questions that remain to be determined after 130 countries struck a landmark deal at a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris last week.
Countries described a global minimum tax and the reallocation of taxing rights for large, highly profitable multinational companies.
The deal is expected to be widely endorsed by G20 finance leaders when they meet Friday and Saturday in Venice, Italy.
Global minimum tax rate negotiations, slated for completion by the G20 leaders’ summit in October, are linked to the outcome of legislation to raise the U.S. minimum tax rate, an official said. Treasure.
The administration of US President Joe Biden has proposed doubling the US minimum tax on intangible income of foreign companies to 21%, as well as a new “enforcement” tax that would deny deductions to companies for payments of taxes for countries that do not adopt the new minimum rate.
Officials said several countries were pushing for a rate above 15%, as well as the United States.
Yellen has worked with the US Congressional Tax Drafting Boards to include such provisions in budget “reconciliation” legislation, in order to align US tax laws with new international tax goals.
Democrats in Congress have said they plan to pursue such legislation, which should include new investments in social programs and tax increases on American corporations and wealthy Americans, without Republican votes if necessary. Republicans have pledged to fight any tax increase in the United States.
Officials said the Treasury legislative proposals for the reallocation of tax rights were carefully crafted to appeal to both Democrats and Republicans.
The plans mark a shift from traditional head office-based taxation to allow countries where America’s largest and most profitable companies sell products and services to tax a portion of those profits. The Treasury could also tax a portion of the profits of large foreign companies selling to the United States.
The official said the benefits of the deal include no loss of U.S. tax revenue and an end to foreign countries’ digital service taxes targeting U.S. tech giants.
Treasury officials added that Yellen also clarifies that a potential new digital tax that is expected to be proposed by the European Commission in the coming weeks to fund the recovery of COVID-19 is incompatible with the European Union’s commitments to the OECD framework agreement signed on July 1.
European Commission Executive Vice President Margrethe Vestager told Reuters news agency the tax would be paid largely by European companies to repay 750 billion euros ($ 887 billion) in loans for a post-pandemic recovery fund.