US urges G20 to raise minimum tax above 15%

Photo: EPA Janet Yellen

US Treasury Secretary Janet Yellen will seek tools to press G20 countries at a meeting this week for a global minimum corporate tax rate that exceeds previously agreed 15% by 130 countries. Still the decision on the rate is not expected until future negotiations, Reuters reported, quoting US Treasury officials.

The exact rate, and potential tax exemptions, are among the issues that will still be determined after the historic agreement at the Paris-based Organisation for Economic Co-operation and Development (OECD) meeting last week. The countries outlined a global minimum tax and the reallocation of taxing rights for large, highly profitable multinational firms. The deal is expected to be supported by G20 finance leaders when they meet later this week in Venice, Italy.

Negotiations concerning the global minimum tax rate, aimed for completion by the G20 leaders' summit in October, is related to the outcome of legislation to increase the US minimum tax rate.

The White House administration has proposed doubling the US minimum tax on corporations overseas intangible income to 21% along with a new companion "enforcement" tax that would deny deductions to companies for tax payments to countries that fail to adopt the new global minimum rate. The officials said several countries were pushing for a rate above 15%, along with the United States. Yellen has been working with the tax-writing committees in Congress to include such provisions in budget "reconciliation" legislation, to align US tax laws with the new international tax goals.

The Treasury officials added that Yellen also made clear that a potential new digital levy expected to be proposed by the European Commission in the coming weeks to fund Covid-19 recovery is inconsistent with European Union commitments to the OECD framework agreement signed on 1 July.

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