The US Treasury Department has stated that it supports a global minimum corporate tax rate of at least 15% lower than the minimum of 21% it has sought to place on international income of US-based firms.
The US Treasury Department announced on Thursday that it supports a global minimum corporate tax rate of at least 15% lower than the 21% it has sought to place on international income of US-based firms.
The difference between the Treasury Department’s latest plan and the higher rate that the Biden administration wants to apply to American companies highlights the challenge of foreign talks led by the Organization for Economic Cooperation and Development. Low business taxes have been a crucial economic growth policy for countries like Ireland.
The offer comes as the Organization for Economic Cooperation and Development (OECD) and the Group of 20 major economies try to reach an agreement on a corporate tax rate minimum.
It’s part of an attempt to put an end to what the Treasury terms a “race to the bottom,” in which countries struggle to slash corporate tax rates and attract multinational corporations.
According to the OECD, businesses that move profits between countries to lower their tax bills cost governments up to USD 240 billion per year.
Competition to reduce corporate tax rates has harmed the US and other countries’ ability to collect the revenue required to make vital investments,” Treasury said in a statement, adding that its proposal had been well received by other nations. Treasury emphasized that the proposed 15 per cent is a floor and said that discussions should continue to be ambitious and push that rate higher.”
President Joe Biden has suggested increasing the US corporate tax rate from 21% to 28% and placing a minimum tax of 21% on corporations’ overseas profits in order to fund his USD 2.3 trillion public works programme.
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