US Treasury Secretary Janet Yellen this week will urge the group of 20 (G20) colleagues for a global minimum corporate tax rate above the 15 percent floor agreed by 130 countries last week, but an interest rate decision will not be made until expected future stages of negotiations. Officials from the US Treasury Department announced on Tuesday.
The specific rate and possible exceptions are among the issues to be determined after 130 countries reached an historic agreement at a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris last week, Aljazeera said Tuesday.
The countries outlined a global minimum tax and redistribution of taxation rights for large, highly profitable multinational corporations. The deal is widely expected to be approved by G20 finance leaders at their meetings in Venice on Friday and Saturday.
A Treasury Department official said the negotiations on the global minimum tax rate, due to be concluded by the G20 summit in October, are linked to the outcome of the legislation to raise the US minimum tax rate.
The Biden administration has proposed doubling the US minimum tax on intangible income of foreign companies to 21% along with a new accompanying “execution tax” that would deny companies deductions for tax payments to countries that do not apply the new global minimum rate.
Officials said several countries along with the US are pushing for a rate above 15%. Yellen has worked with US Congress tax committees to incorporate such provisions into budget reconciliation legislation to align US tax laws with new international tax objectives.
The Democrats in Congress have announced they will pursue such legislation, which is expected to include new investments in welfare programs and tax hikes for US businesses and wealthy Americans, possibly with no Republican votes. Republicans have vowed to fight US tax hikes.
Officials said the Treasury Department’s bill to redistribute tax rights was carefully crafted to appeal to both Democrats and Republicans.
The plans mark a move away from traditional head office taxation to allow countries where the largest and most profitable US companies sell products and services to tax some of those profits. The Treasury Department could also tax part of the profits of large foreign firms selling to the US.
The official said the positive effects of the deal will be no loss of US tax revenue and the abolition of overseas digital services taxes for US tech giants.