US Treasury Secretary Janet Yellen arrives to attend the meeting of G20 Finance Ministers and Central Bank Governors in Venice, Italy, July 9, 2021. G20 Italy / Document via REUTERS

VENICE, Italy, July 10 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Saturday she would work to address concerns of recalcitrant countries that have not signed a comprehensive deal on business taxation , but added that it was not necessary for all nations to adopt it.

Speaking to reporters alongside German Finance Minister Olaf Scholz, Yellen said she believed some of the concerns of countries like Ireland, Estonia and Hungary could be addressed in the run-up to a summit leaders of the G20 in October.

“We will try to do this, but I must stress that it is not essential that every country is on board,” she said.

“This agreement contains a kind of enforcement mechanism that can be used to ensure that recalcitrant countries are not in a position to undermine – use tax havens that undermine the functioning of this global agreement.”

When asked how she would rally a divided US Congress to the deal, Yellen said she was working with congressional tax drafting committees on a budget resolution that would use the rules of budget “reconciliation”.

These rules would allow the passage of a simple majority in the United States Senate, where Democrats hold a majority of one vote if all members of their party are aligned.

“I am very optimistic that the legislation will include what we need for the United States to comply with Pillar 2,” Yellen said, referring to the part of the Organization for Cooperation and Development (OECD) that governs the minimum tax.

The Biden administration proposed to raise the existing U.S. minimum tax on foreign intangible income to 21% and institute a new minimum tax that would deny deductions to companies making tax payments in countries that do not do not adopt the minimum tax.

Yellen said the OECD tax deal, approved in principle by 131 countries and now endorsed by G20 governments, was good for all governments and would increase revenues by ending a “race to the bottom” with countries competing to reduce corporate tax rates.

Reporting by David Lawder and Christian Kraemer; additional reports by Francesco Guarascio; Editing by Leigh Thomas and Gareth Jones

Our Standards: Thomson Reuters Trust Principles.


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