Treasury Secretary Janet Yellen’s team has proposed a 15% global minimum corporate tax in international negotiations aimed at ending competition to lure companies through cheap rates, which then end up eroding government revenues.
“It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion,” the Treasury Department said in a statement Thursday. “Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher.”
The offer moves the U.S. position closer to the 12.5% rate that had been discussed at the Organization for Economic Cooperation and Development prior to the U.S. re-engaging in the negotiations following Joe Biden’s succession as president. The U.S. move could help provide additional momentum to reach a deal in the summer, as the OECD has been aiming for.
Some lower-tax countries — such as Ireland, with a 12.5% corporate rate — had been skeptical of the 21% rate that the Biden administration had called for in March on global income earned by U.S. companies. British officials have also worried that the rate is too high over the long term, even though the U.K. intends to raise its corporation tax to 25% in 2023 to replenish public finances after the pandemic.
The Biden administration is trying to influence other countries in the OECD talks to agree to a rate closer to what the U.S. might have, so there’s less of a mismatch. The Treasury has prioritized a global minimum tax both in its proposals for overhauling the U.S. international tax rules, and in the OECD negotiations.
— With assistance from Isabel Gottlieb
