Launder (CNN Business) – The Biden administration’s ambitious plan to reform global tax system He will face a critical test in the near future.US Treasury Secretary Janet Yellen will meet Group of Seven finance ministers in London on Friday and Saturday, seeking the support of many of the world’s largest economies, an important step in the administration’s efforts to rewrite international tax rules and discourage US companies from taxing their profits abroad.
The G7 finance ministers are expected to back the US plan during the summit. According to a Reuters report Citing a US Treasury official, Washington’s proposal is likely to gain full support when G7 leaders, including President Joe Biden, meet in the UK next week, the news agency reported.
Last month, the US Treasury proposed a global minimum tax rate of at least 15%, aiming to tackle an inflexible and open international system. Setting a lower rate can help deter companies from shifting their profits to countries where they pay lower taxes.
“With the global corporate tax floor set to nearly zero today, there has been a race to the bottom in corporate income tax, undermining the ability of the United States and other countries to raise the income needed to build investment fundamentals,” the US Treasury said in a statement on May 20.
Yellen is likely to find willing negotiating partners this week. The economic ministers of France, Germany, Italy and Spain wrote on Friday A letter to the Guardian newspaper The US proposal was a “promising start”.
Therefore, we are committed to defining a common position on a new international tax regime at the G7 Finance Ministers meeting in London today. We are confident that this will create the necessary momentum to reach a global agreement at the G20 in Venice in July. It is within our reach. They wrote, let’s make sure of it.
Although some major European economies indicated their approval of the plan, the United Kingdom resisted. British Finance Minister Rishi Sunak to Reuters on Thursday That the US proposal may work, but the details still need to be refined.
G7 support could help accelerate parallel financial negotiations between nearly 140 countries led by the Organization for Economic Co-operation and Development (OECD).
Ireland, which has managed to attract companies from all over the world, including major US tech companies, by offering a corporate tax of just 12.5%, is one of the countries that have expressed significant reservations about Biden’s proposal.
Biden’s plan for at least $1.4 billion in new infrastructure spending depends in large part on his ability to win support for a global minimum corporate tax that increases payments to the Treasury.
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