U.S. FLOATS 15% GLOBAL MINIMUM TAX ON CORPORATE PROFITS
The US has called for a global minimum corporate tax of at least 15%, less than the 21% rate it has proposed for the overseas earnings of US businesses -- a level that some nations have argue is excessive, Saleha Mohsin and Laura Davison reported for Bloomberg News.
The contrast between the new proposal, released by the Treasury Department Thursday, and the higher rate the Biden administration is seeking to be applied to American companies underscores the difficulty of international talks being led by the Organization for Economic Cooperation and Development (OECD).
Countries including Ireland have used low business taxes as a key economic development strategy. Negotiators are aiming for a deal this summer.
Treasury Secretary Janet Yellen has argued for an ambitious effort to end a global “race to the bottom” on company taxes. Such competition has eroded the revenues of governments that have run up record debt levels amid the COVID-19 crisis.
Her approach marked a turnaround from the Trump administration and has energized the talks among about 140 nations on the issue.
“It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion,” the Treasury Department said in a statement on Thursday.
“Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher.” The offer, which came in talks held this week, moves the US closer to the 12.5% rate that had been discussed at the OECD before the US re-engaging in the negotiations following Joe Biden’s election as president.
Japanese Finance Minister Taro Aso, speaking to reporters in Tokyo, said the U.S. proposal represents progress, although more discussion is needed. He said he expects movement toward global tax agreements, including a digital tax, at the G-20’s summer meeting, but final deals may not happen until later in the year.
Some lower-tax countries -- such as Ireland, with a 12.5% corporate rate -- had been skeptical of the 21% rate the Biden administration has urged Congress to enact for global income earned by US companies.
WEEKLY FEATURE : TRUEMONEY PHILIPPINES BUCKS THE COVID-19 CHALLENGE