By Doug Connolly, Multinational Corporate Taxation
The seven countries that have yet to sign the Inclusive Framework declaration approving the adoption of a global minimum tax have their reasons for delaying, but “it is important to stress that all countries” remain constructively engaged, according to Grace Perez-Navarro, Deputy Director of the OECD Center for Tax Policy and Administration.
Speaking virtually at an event hosted by the Tax Policy Center on July 13, Perez-Navarro said some countries simply wanted more time to assess the provisions included in the declaration recently approved by more than 130 countries.
While some details remain to be finalized, including the minimum tax rate – currently defined as “at least 15%” – other countries are waiting to see how the final details turn out, Perez-Navarro said.
Specifically highlighting Ireland in this regard, Perez-Navarro said that “some countries have expressed concern that, well, they might agree with 15%, but they might agree less with higher rates. “. These countries would like to see how the remaining negotiations go before committing to anything.
Notably, the president of Estonia, another of the seven holdouts, said today that the country is only resisting to see more technical details, according to a CNBC report. The corporate tax rate in Estonia is already above the proposed minimum, unlike in Ireland, and no business will fall under the new rules. The country is simply seeking to confirm compatibility with national law before committing.
Whatever the reasons for their delay, Perez-Navarro noted that all the selected countries âhave indicated that they intend to continue to work constructively, through the Inclusive Framework, through this next phase of the project. . And so we will expect that in the end they will join us. “
In this regard, there are already two countries – Peru and Saint Vincent and the Grenadines – which signed after initially refusing the publication of the declaration on July 1.
It is also interesting to see how the United States is adapting its Global Minimum Tax on Low Tax Intangible Income (GILTI) to align with the minimum tax envisioned in the Inclusive Framework declaration. The Biden administration has proposed amending the GILTI to increase the rate to 21% and require a country-by-country calculation, but such measures will still have to go through Congress.
“It is agreed that account will be taken of the conditions under which the US GILTI regime will coexist with the GloBE rules to ensure a level playing field,” said Perez-Navarro. “And that obviously signals that we need to see what changes might arise in the GILTI rules in the future.”
Responding to a question on whether the minimum tax would be based on accounting income or fiscal income, Perez-Navarro clarified that the calculation of the minimum tax would be based on âfinancial statements with certain adjustmentsâ. Such an approach was described in the OECD master plan published last October. She explained that this decision was taken to ensure that the necessary information would be available to all countries, including developing countries.