G-7 Reportedly Nears Deal On Yellen’s Global Minimum Corporate Tax Proposal
If the spin from the mainstream media is to be believed, it looks like the international system of corporate taxation envisioned by President Joe Biden and Treasury Secretary Janet Yellen is progressing nicely after the administration offered a key concession earlier this month.
After agreeing to lower the minimum effective rate to 15% from 21%, the Biden Administration is close to clinching a deal with the other members of the G-7 on an international tax accord that they could then bring to the G-20 and OECD, the NGOs that are the leading venues for what would be the biggest international tax accord in a century. According to an FT report, an accord paving the way for a global deal could be ready as soon as Friday.
A deal would seriously limit the ability of corporations (particularly American tech giants) to save money by moving to low-tax jurisdictions. It follows President Biden’s plans for the biggest tax hikes in decades to finance his two-part, multi-trillion infrastructure packages rolled out in accordance with Biden’s “Build Back Better” slogan, as well as a series of tax-related judgments in European courts.
US officials are growing increasingly confident that they have most of their G-7 peers on board with the plan, which has so far received mostly approving comments from Europe’s reigning centrist technocrats.
Even in notoriously euro-skeptic Italy, Daniele Franco, the finance minister of Italy, which is chairing the G-20, said on Friday that the latest US proposal was “another important step” and that the prospects for the tax scheme were “now concrete.”
To be sure, there are still some kinks that need to be worked out: the UK has been described by some of the FT’s sources as “difficult.” and both Britain and France supposedly want to place a greater weight on the location of tax payments. But officially, ministers in London insist they want to make sure that both elements of the deal are prioritized and the US administration is serious in pushing the change to the location of corporate tax payments through Congress.
However, amid all this progressive cheering, The FT does admit – deep in the story – that countries with lower corporation tax rates have not yet signalled their agreement.
G-7 members will have another opportunity to talk about the plan in the open later this week when the G-7, which includes the US, Japan, Germany, the UK, France, Italy and Canada, meets to hold a virtual meeting of finance ministers as well as an in-person meeting on June 4 and June 5 in London where officials believe the central tenants of the deal will be cemented.
The Treasury announced Monday that Secretary Yellen – who has been tasked by Biden with managing the process – will attend the G7 finance ministers meeting in London, and while their, she will “reinforce the US commitment to policy priorities to promote the global recovery from the COVID-19 pandemic including supportive fiscal policies, vaccine access, and distribution.
It’s expected that a final agreement might be concluded at the G-7’s summit in Cornwall. Afterwards, the membership, which represents a powerful bloc within the OECD, is expected to make its final pitch to their fellow OECD members by the end of the year. The G-20, which is officially managing the plan, has said it wants to reach a deal by the summer, but others have said that October is probably a more realistic date.
Mon, 05/24/2021 – 10:25