The U.S. Treasury Department proposes the lowest global corporate tax rate of 15% | Business & Economic News
The Biden administration hopes that this move will end competition in order to attract companies to countries with low tax rates, which will ultimately weaken the government’s fiscal revenue.
The United States proposes that countries should agree to impose a 15% tax on the world’s lowest corporate tax in international negotiations, in order to end the competition to attract companies at low prices, which will eventually erode government revenue.
The Ministry of Finance said in a statement on Thursday: “We must work hard to eliminate the pressure of corporate tax competition and erosion of the company’s tax base.” “The Ministry of Finance emphasizes that 15% is the minimum. The discussion should continue to be ambitious, and this The ratio pushes up.”
The offer was made during negotiations this week, bringing the United States’ position closer to the 12.5% ??level discussed by the Organization for Economic Cooperation and Development (OECD) before the United States re-engaged in negotiations after Joe Biden was elected president. As the OECD’s goal is, the US move may help provide more impetus to reach an agreement in the summer.
Some countries with lower tax rates (for example, Ireland, where the corporate tax rate is 12.5%) are skeptical of the 21% tax rate on global income for US companies previously proposed by the Biden administration. British officials are also worried that the tax rate will be too high in the long term, although the UK intends to increase the corporate tax to 25% in 2023 to supplement public finances after the pandemic.
The Biden administration is trying to influence other countries in the OECD negotiations to agree that the exchange rate is close to the possible exchange rate of the United States, so there will be no mismatch. The Treasury Department has prioritized the global minimum tax rate in its proposals to comprehensively reform the U.S. international tax rules and in the OECD negotiations.
The United States issued a framework for global system reform in early April. After the Trump administration withdrew from negotiations, it effectively restarted negotiations with about 140 countries.
The US proposal also sets a goal to ensure that about 100 of the world’s largest companies pay more wherever they actually do business. Although there are still doubts about the enforceability of this move, dispute resolution and how poorer economies will benefit, this broader initiative has almost sparked trade in the era of former President Donald Trump. The course of the war injected momentum.
Treasury Secretary Janet Yellen’s approach has attracted a warm welcome from larger countries that have maximized the revenue by deriving revenue from global companies operating in lucrative domestic markets. France is one of the countries that supports the actions of the United States. Other countries that make money from hosting multinational companies also have reservations.
On the domestic front, Biden proposed to increase the corporate tax rate from 21% to 28%. Republicans and many business groups generally opposed this idea, saying it would make the United States less competitive, while the key moderate Democrat Senator Joe Manchin asked for a small interest rate hike.
According to the Organization for Economic Cooperation and Development (OECD), changes in the distribution of tax rights may redistribute about US$100 billion, and the combination of the minimum tax rate pillar and existing US regulations will increase the global revenue of governments by as much as 1,000 per year. One hundred million U.S. dollars.