US Assistant Secretary of the Treasury Wally Adeyemo has said he expects strong support from G7 peers for Washington’s proposed 15% plus global corporate minimum tax, which should help to solidify US congressional support for national corporate tax legislation.
“I have a feeling that you are going to see great unified support within the G7 to move forward,” Adeyemo told Reuters on Monday after France, Germany, Italy and Japan made moves. positive comments on the Treasury proposal. Read more
That support could be expressed at a face-to-face meeting of G7 finance ministers in London on June 4-5, Adeyemo said. Read more
Optimism over a long-sought comprehensive deal on how to tax the largest multinationals and digital service companies has grown since the Treasury said last week it would accept a global minimum tax rate of 15 % or more.
The rate is well below the minimum 21% rate proposed by the Biden administration for overseas income of U.S. businesses and the proposed national corporate tax rate of 28%. Read more
The Financial Times reported Thursday that the G7 countries are on the verge of agreeing on the taxation of multinational companies. As talks unfold between nearly 140 countries through the Organization for Economic Co-operation and Development (OECD), the G7 countries – the United States, Japan, Germany, Britain, France, Italy and Canada – have a strong influence on multilateral decisions. .
The reaction of the British president of the G7, who currently has a corporate tax rate of 19%, has been more cautious. When asked if Britain would support Washington’s 15% minimum proposal, Prime Minister Boris Johnson focused on the taxation of large tech companies such as Alphabet Inc (GOOGL.O) and Facebook Inc (FB.O).
“Reaching an international agreement on how large digital companies are taxed is a priority, and we welcome the renewed US commitment to find a solution,” Johnson said. Read more
The United States’ global minimum tax proposal is expected to be a key topic of discussion at a preliminary virtual meeting of G7 financial leaders on Friday.
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Adeyemo, who is involved in the OECD tax negotiations, said he expects a broad international commitment of 15% or more to build congressional support for an increase in the income tax. companies in the United States by reducing the spread between US and foreign rates.
In 2017, the Trump administration and Republicans in Congress reduced the corporate tax rate in the United States to 21% and instituted a minimum tax rate on foreign income from intangible sources of 10.5%. Business groups, including the US Chamber of Commerce, have opposed any increase in US tax rates, arguing it would put US businesses at a disadvantage.
Adeyemo said a higher U.S. minimum tax would prompt other countries to adopt the U.S. rate.
“If we can get the world to say they’re ready to do at least 15%, that gives us the opportunity to get back to the international conversation once we’ve finished the domestic part.”
Senate Finance Committee Chairman Ron Wyden said he was encouraged by the Treasury’s progress in the negotiations.
“A global deal could support the necessary reforms to US tax laws, ensuring that our multinational companies are incentivized to invest in the US and pay their fair share,” Wyden said.
OECD tax negotiators are aiming for a tentative deal this summer.
By the time the G20 financial leaders meet in Venice in July, there should be a good sense of unity around a global minimum tax structure, Adeyemo said. He added that there would be many technical details to be worked out, so a final deal may have to wait until G20 leaders meet in Rome at the end of October.
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