By David Lawder
WASHINGTON (Reuters) – US Treasury Secretary Janet Yellen will push her G20 colleagues this week for a global minimum corporate tax rate above the 15% floor agreed by 130 countries last week, but an interest rate decision is not expected until future stages of negotiations, US Ministry of Finance announced the officials on Tuesday.
The specific rate and possible exceptions are among the issues to be determined after 130 countries reached historic agreement at a meeting of the Organization for Economic Co-operation and Development (OECD) in Paris last week. 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 when they meet in Venice, Italy on Friday and Saturday.
Negotiations on the global minimum tax rate, due to be concluded by the G20 summit in October, are tied to the outcome of legislation to raise the US minimum tax rate, an official from the Treasury Department said.
The Biden administration has proposed doubling the US minimum tax on intangible income of companies overseas 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 United States are pushing for a rate in excess of 15%.
Yellen has worked with the tax committees of Congress to incorporate such provisions into budgetary reconciliation legislation to bring US tax law into line with new international tax objectives.
The Democrats in Congress have announced that they will pursue such legislation, which is expected to include new investments in welfare programs and tax hikes for US businesses and wealthy Americans, without Republican votes if necessary. 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 story goes on
The plans mark a move away from traditional headquarters 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 a portion of the profits of large foreign firms selling to the United States.
The official said the positive effects of the deal will be to ensure that no U.S. tax revenue is lost and that overseas digital services taxes end for U.S. tech giants.
The tax officials added that Yellen is also making it clear that a potential new digital levy that the European Commission is expected to propose in the coming weeks to fund recovery from COVID-19 is inconsistent with the European Union’s commitments under the OECD Framework agreement is compatible https: // www .oecd.org / tax / beps / statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitization-of-the -economy-july-2021.pdf signed July 1st
European Commission Vice President Margrethe Vestager told Reuters that the levy will largely be paid by European companies to repay € 750 billion ($ 886 billion) in loans for a post-pandemic recovery fund.
(Reporting by David Lawder and Andrea Shalal, editing by Franklin Paul, Barbara Lewis and Aurora Ellis)