Global corporate tax deal gathers momentum as European countries back US plans for global minimum corporation tax
"Global minimum tax for corporations inches towards reality", 6 April 2021
Proposed by the United States, supported by the IMF and welcomed by major economies including France and Germany, a global minimum tax rate on corporations is gathering momentum toward becoming a reality.
The reform aimed at ending tax competition between countries and the use of tax havens by companies will be on the agenda of G20 finance ministers when they meet virtually on Wednesday, and the group could unveil a proposal by July.
The idea has been promoted by the Organization for Economic Co-operation and Development but received a fresh boost this week when US Treasury Secretary Janet Yellen said she would push for an agreement among the advanced economies in the G20.
"Together, we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations," Yellen said on Monday.
The idea is to ensure companies pay a minimum amount of tax regardless of where they are located, preventing firms from evading taxes by establishing headquarters in countries with lower rates -- a practice prevalent among tech companies which drains resources from government coffers...
President Joe Biden last week proposed raising the rate again to finance a massive $2 trillion infrastructure and jobs plan.
However, Yellen has said it would be best to couple a US rate increase with the establishment of a global minimum tax to end the "race to the bottom" among countries to see who implements the lowest rate...
The international reform would be comprised of two components: the minimum tax rate and the establishment of a system to modulate corporate taxes based on profits in each country, regardless of where they are headquartered -- which would likely impact tech giants the most.
No official rate has been decided, but estimates range between 12.5 percent and 21 percent.