Treasury Secretary Janet Yellen could push G-20 finance ministers at a meeting in Venice, Italy this week for a global minimum tax rate above the 15% threshold agreed by 130 countries last week US Treasury officials said Tuesday.
Officials said in a call with reporters that the 15% floor could be raised in upcoming negotiations after the G-20 finance ministers meet in Venice. A rate decision is not expected until upcoming meetings between members of the Paris-based Organization for Economic Co-operation and Development, officials said.
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Yellen is expected to meet with his G20 counterparts and attend the Venice International Climate Conference on July 11. From there, she will travel to Brussels to meet with her counterparts from the European Union and the Eurogroup “to discuss US political priorities and respective efforts to support the recovered economy,” the Treasury said.
The meeting comes just a week after an innovative agreement between 130 OECD countries for a conceptual framework to overhaul the global tax system, including a minimum rate of at least 15% on multinational companies, regardless of location. where they operate.
The global minimum corporate tax rate aims to eradicate certain tax havens that allow multinational companies to protect their profits, while giving smaller countries more tax revenue from large corporations. Yellen said a global tax, which would apply to corporate profits overseas, would eliminate what she described as a “global race to the bottom” in terms of corporate taxes.
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Corporations employ a litany of tactics to reduce their tax liability, often by shifting their profits and income to low-tax countries such as Bermuda, the Cayman Islands or Ireland, regardless of where the sale is. been carried out. The practice of U.S. and foreign multinationals costs the United States tens of billions of dollars each year, according to the Treasury Department.
The OECD has lobbied for years to eliminate corporate strategies that “exploit loopholes and inadequacies in tax rules to avoid paying taxes.” The global minimum tax would apply to foreign corporate profits, meaning countries could still set their own corporate tax rates at home.
The Biden administration is separately pushing to raise the corporate tax rate in the United States from 21% to 28% – reversing part of the Republican tax law of 2017 – to help fund a sweeping plan that would expand significantly the government funded social safety net.
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Democrats plan to include this tax hike, along with higher levies on wealthy Americans, in a multibillion-dollar package that they hope to pass later this year using a procedural tool known as the budget reconciliation, which allows them to bypass an obstruction of 60 votes. by Republicans.
Yellen plans to tell G-20 finance ministers that Democrats will also include wording on global minimum tax in the reconciliation bill, as well as wording that removes tax deductions for U.S. businesses located in U.S. countries where the minimum rate is lower than here.
Edward Lawrence of FOX Business contributed to this report