The U.S. Treasury is proposing a minimum global tax rate of 15 percent Business and Economy News

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The Biden administration hopes the measure will put an end to competition to attract companies to countries with low tax rates, which will end up eroding government coffers.

Per Bloomberg

The US has proposed that countries agree on a global minimum tax of 15% on companies in international negotiations aimed at ending competition to attract companies through economic rates, which will end up eroding government revenues.

“It is imperative to work multilaterally to end corporate tax competition pressures and erode the corporate tax base,” the Treasury Department said in a statement Thursday. “The Treasury stressed that 15% is land and that discussions should continue to be ambitious and increase that rate.”

The offer, which was unveiled in talks this week, brings the U.S. position closer to the 12.5% ​​rate discussed at the Organization for Economic Cooperation and Development. before the U.S. re-entered negotiations after the election of Joe Biden as president. The US measure could help give additional impetus to reaching an agreement in the summer, as the OECD has tried.

Some countries with lower taxes, such as Ireland, with a corporate tax rate of 12.5%, had been skeptical about the 21% rate that the Biden administration had previously proposed on global revenues from US companies. . British officials have also been concerned that the rate would be too high in the long run, although the UK intends to increase its corporate tax to 25% by 2023 to replenish public finances after the pandemic.

The Biden administration is trying to influence other countries in OECD talks to agree on a rate closer to what the US could have, so there is less mismatch. The Treasury has prioritized a global minimum tax both in its proposals to revise U.S. international tax rules and in OECD negotiations.

New frame

The United States released a framework to renew the global system in early April, effectively restarting talks with about 140 countries after the Trump administration withdrew from negotiations.

U.S. proposals have also set a goal of ensuring that the world’s approximately 100 largest companies pay more to places where they actually do business. While questions remain about the applicability of this movement, the resolution of disputes, and how poorer economies could benefit, the broader initiative is reinjecting momentum in a process that nearly sparked a trade war in the era of former President Donald Trump.

Treasury Secretary Janet Yellen’s approach has led to a warmer reception from larger countries Treasury coffers have more to gain by capturing revenue from global companies operating in lucrative domestic markets. France was one of the people who endorsed the movements of the United States. Other countries that make money by hosting multinationals have reservations.

At the national level, Biden has proposed raising the corporate tax rate from 28% to 28%. The idea has been universally criticized by Republicans and many business groups, who say it will make the U.S. less competitive, while moderate Democratic Sen. Joe Manchin has called for a smaller rise.

According to the OECD, changes in the allocation of tax rights could redistribute about $ 100 billion, while the minimum tax pillar, combined with existing rules in the United States, would increase global government revenue by up to $ 100,000 millions of dollars a year.





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