Daily Management Review

US Treasury Deputy Chief Confident Of G7 Support For 15%+ Global Minimum Corporate Tax


US Treasury Deputy Chief Confident Of G7 Support For 15%+ Global Minimum Corporate Tax
The proposal of the United States to impose a 15 per cent or higher global minimum corporate tax will be strongly supported by other members of the G7, said the US Treasury Deputy Secretary Wally Adeyemo.
Such a measure would also help top get solid support for domestic corporate tax legislation from the US Congress.
"My sense is that you're going to see a lot of unified support amongst the G7 moving forward," Adeyemo said in an interview to Reuters on Monday following positive comments being made about the Treasury's proposal by France, Germany, Italy and Japan.
Adeyemo said that the member of the G7 countries could voice support for the US proposal at an in-person meeting of G7 finance ministers in London on June 4 to 5.
The US Treasury has said last week that it would accept a global minimum tax rate of 15 per cent or higher and since then there has been increased optimism about a comprehensive deal over how the largest multinationals and digital services companies should be taxed – a deal that has been sought for quite some time.
That rate is however much lower than the 21 per cent minimum rate proposed by the Biden administration for the overseas income of US companies and the 28 per cent minimum rate of corporate tax proposed for domestic companies.
G7 countries are close to agreement on the corporate taxation of multinational firms, claimed a report on Thursday published in the Financial Times. Even though the issue is being discussed among almost 140 countries through the Organization for Economic Cooperation and Development (OECD), there is a strong influence over multilateral decisions of the G7 countries -- the United States, Japan, Germany, Britain, France, Italy and Canada.
However a cautious reaction to the US proposal has been given by Britain – which is the G7 chair and which currently has a 19 per cent corporate tax rate. UK Prime Minister Boris Johnson shifted the focus to taxation of large tech companies such as such as Alphabet Inc and Facebook Inc when he was asked if Britain would support Washington's 15 per cent minimum proposal.
"Reaching an international agreement on how large digital companies are taxed is a priority, and we welcome the U.S.'s renewed commitment to reaching a solution," Johnson said.
He expects that if there is a broad international commitment of 15 per cent or more for corporate taxes, it would also help to build support for a US corporate tax increase which will barrow down the gap in the rate of tax between the US and other overseas market, said Adeyemo who is also a part of the OECD tax negotiations.
There would be incentives for other countries to move toward the US rate if it was possible to implement a higher tax rate in the US, Adeyemo said.
"If we can get the world to say that they’re willing to do at least 15%, it gives us the ability to come back to the international conversation once we’ve finished the domestic piece."