US Treasury chief calls for global minimum corporate tax

Cornelia Mascio
Aprile 7, 2021

According to Yellen, one of the effect of an interconnected world has been a 30-year race to the bottom on corporate tax rates.

The new multilateral approach begins with the U.S. taking a leading role in working with Group of 20 nations to find an appropriate minimum corporate tax.

German finance minister Olaf Scholz and European Union economic affairs commissioner Paolo Gentiloni signalled their support for the overhaul on Tuesday.

"President Biden's proposals announced last week call for bold domestic action, including to raise the USA minimum tax rate, and renewed global engagement, recognizing that it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion", Yellen said.

Biden's plan would raise the United States corporate tax to 28% and the minimum for multinationals to 21%, partially reversing the previous administration's cut from 35% in its 2017 tax legislation.

The Liberal government's fall economic statement last November reiterated Canada's support for a new deal on worldwide taxation, which has been the subject of discussion for years among members of the Organization for Economic Co-operation and Development.

Despite Ms Yellen's intervention, the British Treasury said that it remains focused on reaching a deal to fairly tax the profits of tech titans rather than a wider shake-up of the global system.

Yellen calls for global minimum corporate tax rate in first major address as Treasury secretary

A French finance ministry source said it was far from certain the proposed USA minimum would make it through Congress, where the bill is likely to face stiff opposition from Republicans. However, she will reportedly argue that the tax rate minimum is for the main objective of ensuring those foreign countries have enough revenue to maintain their own governments.

Irish banks used €500m in losses to cut corporatio.

"We think that the shift in the American administration's position can breathe new life into negotiations with European countries with extremely low rates", the source added.

Ms Yellen wants to halt what she described as an global "race to the bottom" by countries competing to lure corporations with lower taxes.

"The public coffers are empty due to the Corona crisis".

During Donald Trump's presidency, the business-minded Republican slashed the US rate from 35% - a global high - to 21%, arguing the previous rate put American companies at a global disadvantage and resulted in many of them moving their businesses overseas. "Now is the chance", he said.

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