Germany and France see global tax deal in reach after USA pledge

Biden admin to call for worldwide tax hike so that US businesses don’t leave country following its corporate tax increase

Biden admin to call for worldwide tax hike so that US businesses don’t leave country following its corporate tax increase

The European Commission backed on Tuesday a call from U.S. Treasury Secretary Janet Yellen for a global minimum corporate tax, but said its rate should be decided in talks in the Organisation for Economic Cooperation and Development (OECD).

The IMF's top economist said the fund has long supported a global minimum tax.

US Treasury Secretary Janet Yellen on Monday said she was working with G20 countries to adopt a global minimum corporate tax rate that would stem the erosion of government revenues.

"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.

In her address to the Chicago Council, Yellen said a personal objective of her is to focus on America; global engagements on fostering full legal rights and greater economic and education opportunities for women and girls, given the clear evidence that this will support inclusive economic growth more broadly.

Biden proposed raising the USA corporate tax rate to 28% and the minimum for multinationals to 21%.

She dropped a key demand in Trump-era negotiations over taxation of technology companies such as Alphabet Inc.'s Google and Facebook Inc., lifting a barrier that had raised transatlantic trade tensions and prevented an global deal combining minimum and digital tax issues. Pillar 1 of the OECD's reform blueprint, which apportions global profits to the countries in which their customers are located, based on the principle that companies must pay tax in every market where they generate value and make profits, makes eminent sense.

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G20 finance ministers and central bank governors will gather virtually on Wednesday.

The corporate tax hikes in the USA and Britain are being presented as an effort to raise billions in revenue to help offset the cost of pandemic-related support programs and stimulus spending.

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 evidence does not support the assumption ... that higher headline [corporate income tax] rates will produce more corporate tax revenue for governments", the report stated.

In an online briefing, she said the current disparities in corporate tax rates had triggered "a large amount" of tax shifting and tax avoidance, reducing the tax base of governments.

"We are delighted by the U.S. support for a minimal corporate tax", French Finance Minister Bruno Le Maire told AFP. "It is a big concern of ours".

"We remain committed to ensuring that all businesses, including digital ones, pay their fair share of tax, where it is rightfully due", European Commission spokesman Dan Ferrie told a news briefing when asked about the USA proposal.

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