The head of the Organization for Economic Co-operation and Development (OECD) said on Tuesday he was “quietly optimistic” that a historic agreement to establish a global minimum tax will be approved by members of the European Union, but its implementation may not take place before 2024.
OECD Secretary-General Mathias Cormann also told a panel at the World Economic Forum in Davos, Switzerland, that it was “clearly” in the interests of the United States to join the deal reached. last year between nearly 140 countries to establish a global minimum tax rate. 15% on multinational companies.
“I am quietly optimistic that the European Commission will present the directive to implement” the agreement, Cormann said.
Cormann’s remarks came as French Finance Minister Bruno Le Maire said on Tuesday he was confident EU finance ministers would unanimously back a global minimum tax next month.
EU approval has been delayed by objections from Poland, which vetoed a compromise in April to launch the 137-country deal.
U.S. approval, meanwhile, has been stalled in Congress, and Cormann was asked if prospects for U.S. ratification would be dashed if Republicans who largely oppose the deal win a majority in the House of Representatives and in the Senate in November’s midterm elections.
The deal could be implemented by other countries even if U.S. lawmakers refuse to sign, and Cormann argued that would disadvantage U.S. multinational companies.
“I can’t imagine any country…would make a judgment that would put itself at such a disadvantage,” Cormann said. “I believe that regardless of who has a majority in Congress…it’s clearly in the interests of the United States.”
Congress must approve changes to the current 10.5% US global minimum tax known as “GILTI”, raising the rate to 15% and converting it to a country-by-country system.
The changes were originally included in US President Joe Biden’s sweeping social and climate bill, which was stalled last year after objections from centrist Democrats in the Senate.
But the prospects for a leaner spending package with the tax changes look increasingly dim as the midterm congressional elections approach and as lawmakers raise concerns about increased spending amid high inflation.
Source: Reuters (report by Dan Burns; editing by Jason Neely)
