Daily Management Review

US Treasury Expects Endorsement Of Its Global Minimum Corporate Tax Proposal By The G7


US Treasury Expects Endorsement Of Its Global Minimum Corporate Tax Proposal By The G7
The Treasury Department of the United States expects the G7 wealthy democracies to agree to the proposal of Washington to accept and adopt an ambitious global corporate minimum tax when the leaders of those countries get together other later in the week in the United Kingdom, said a US Treasury official.
The meetings of the Group of Seven finance ministers set to meet on Friday and Saturday in London is expected by the US Treasury for accepting and adding momentum to for advancing global corporate tax negotiations to come to an agreement on placing the issue for discussions at the broader G20 finance meeting that is slated to be in he3lf July in Italy, said an official of the Department in an emailed statement to the media.
The official added that it is expected that the proposal will be completely endorsed at the end of the G7 meetings with the leaders summit.
Imposing a minimum corporate tax of at least 15 per cent globally was proposed by the US Treasury in May aimed to stop countries constantly bringing down taxes on the corporate around the world and consequently prevent them from taking away their profits to tax-haven countries.
The proposed tax rate is lower than the own proposals of the Biden administration which was reported to be planning to increase the domestic corporate tax rate to 28 per cent while also imposing a minimum of 21 per cent taxes on overseas profits earned by companies headquartered and registered in the US.
According to a media statement issued in May by the US Treasury Deputy Secretary Wally Adeyemo, strong support for the minimum corporate tax proposal by the US from G7 countries was expected by him. Such support would also help to cement the tax plans of the US President Joe Biden among US lawmakers.
Expectations from the finance ministers' meetings in London have been raised by a number of other G7 officials which will be the first time that the officials and leaders would be meeting face to face since the beginning of the Covid-19 pandemic – which had forced the meeting to be held virtually last year.
The G7 is expected to make “significant progress” on corporate tax issues, according to German Finance Minster Olaf Scholz. Such solutions would include the tough to agree issue of an agreement on how to impose taxes for the large global digital services companies such as Facebook, Amazon.com, Alphabet Inc’s Google, Apple Inc and Microsoft.
Unilateral digital services taxes targeted at these firms – most of which are American, have been imposed by a number of countries. Such measures have drawn threats of retaliatory tariffs from the United States.
Any form of tax arrangement for such large tech companies should be such that it should not discriminate against American companies, the United States has insisted, and has urged to prohibit all digital services taxes imposed by individual countries. The US has also proposed imposing a universal tax regimen on the 100 largest and most profitable companies with the aim of making such companies cough up more in taxes in the countries where they do business irrespective of the industry classification of the business models of the companies.