Berita 24 English - US Treasury Deputy Secretary Wally Adeyemo said he anticipates strong support from Washington's G7 counterparts for...
Berita 24 English - US Treasury Deputy Secretary Wally Adeyemo said he anticipates strong support from Washington's G7 counterparts for Washington's proposed 15%-plus global minimum corporate tax, which should help solidify support for domestic corporate tax legislation in the US Congress.
"My sense is that you're going to see a lot of unanimity among the G7 going forward," Adeyemo told Reuters on Monday, following positive comments from France, Germany, Italy, and Japan about the Treasury's proposal.
This support may be expressed during the G7 finance ministers' in-person meeting in London on June 4-5, Adeyemo said.
Optimism about a long-awaited comprehensive deal on how to tax the world's largest multinational corporations and digital service providers has grown since the Treasury announced last week that it would accept a global minimum tax rate of 15% or higher.
The rate is significantly lower than the Biden administration's proposed minimum rate of 21 per cent on foreign income earned by US companies and its proposed domestic corporate tax rate of 28 per cent.
The Financial Times reported Thursday that the G7 countries are close to reaching an agreement on how multinational corporations should be taxed. While the discussions are taking place through the Organization for Economic Cooperation and Development (OECD), the G7 countries – the United States, Japan, Germany, the United Kingdom, France, Italy, and Canada – wield considerable influence over multilateral decisions.
Britain, which chairs the G7 and currently has a corporate tax rate of 19 per cent, has been more circumspect in its response. When asked whether the United Kingdom would support Washington's 15% minimum proposal, Prime Minister Boris Johnson shifted the focus to taxation of large technology companies such as Alphabet Inc and Facebook Inc.
"Resolving the international dispute over how large digital companies are taxed is a priority, and we applaud the United States' renewed commitment to finding a solution," Johnson said.
The US proposal for a global minimum tax is expected to be a major point of discussion at Friday's preliminary virtual G7 finance leaders meeting.
CONNECTION OF DOMESTIC TAXES
Adeyemo, who is involved in the OECD's tax negotiations, stated that he expects a broad international commitment of 15% or more to help build support in Congress for a US corporate tax increase by closing the gap between the US and foreign corporate tax rates.
In 2017, the Trump administration and Republicans in Congress lowered the corporate tax rate in the United States to 21%. They enacted a 10.5 per cent minimum tax on overseas income from intangible sources. Business groups such as the US Chamber of Commerce have opposed any increase in US tax rates, arguing that they would disadvantage US firms.
Adeyemo stated that a higher US minimum tax would encourage other countries to adopt the US rate.
"If we can convince the world that they are willing to do at least 15%, we will be able to return to the international conversation once the domestic piece is complete."
Senator Ron Wyden, chairman of the Senate Finance Committee, expressed optimism about Treasury's progress in the negotiations.
"A global agreement could pave the way for necessary reforms to the United States' tax laws, ensuring that multinational corporations invest in the United States and pay their fair share," Wyden said.
The OECD's tax negotiations have been aiming for a preliminary agreement this summer.
By the time the G20 finance leaders meet in Venice in July, Adeyemo said, there should be a strong sense of consensus on a global minimum tax structure. He added that because numerous technical details would need to be ironed out, a final agreement might have to wait until the G20 leaders meet in Rome at the end of October.
