The US Treasury Department has proposed a minimum 15% tax on businesses around the world

The United States has proposed that countries agree to an overall minimum tax of 15% in international negotiations to end competition to attract business through cheap rates., which later end up eroding government revenues.

“It is imperative to work at the multilateral level to end the pressures of tax competition and the erosion of the corporate tax base,” the Treasury Department said in a statement on Thursday. “The Treasury stressed that 15% is a floor and that discussions must continue to be ambitious in order to increase this rate.”

The offer, which was made during talks this week, brings the US position closer to the 12.5% ​​rate that was discussed at the Organization for Economic Co-operation and Development (OECD) before. the return of the country. negotiations following the election of Joe Biden as president. US move could provide further impetus to reach deal this summer, as pointed out by the OECD.

Some low-tax countries, like Ireland, with a business rate of 12.5%, were skeptical of the 21% rate the Biden administration had previously proposed for global income earned by businesses. American. UK officials also fear that in the long run the rate may turn out to be too high, as the UK intends to increase its corporate tax to 25% by 2023 to rebuild public finances after the pandemic.

The Biden government is trying to influence other countries in the OECD talks to agree on a rate closer to what the United States might have, so there would be less inadequacy. The Treasury has prioritized a global minimum tax both in its proposals to revise US international tax rules and in OECD negotiations.

In early April, the United States released a framework for renewing the global system, resuming talks with around 140 countries after the Trump administration pulled out of negotiations.

The US proposals also set the goal of ensuring that the world’s 100 largest companies pay more where they actually do business.. While doubts remain about the applicability of such a measure, to resolving disputes, and how poorer economies might benefit from it, the larger initiative is re-injecting momentum into a process that narrowly sparked a trade war in the era of former President Donald Trump.

Treasury Secretary Janet Yellen’s approach has garnered a warmer reception from major countries whose treasuries have the most to gain by capturing revenues from global corporations operating in lucrative domestic markets. France is among those who support the American measures. Other nations that make money by hosting multinationals have shown their reservations.

In the United States, Biden has proposed increasing the corporate tax rate from 21% to 28%. The idea has been universally criticized by Republicans and many business groups, who say the measure would make the United States less competitive, while moderate Democratic Senator Joe Manchin called for a smaller increase.

According to the OECD, changes in the way tax rights are allocated could redistribute around US $ 100 billion, while the minimum tax pillar, combined with existing US standards, this would increase global government revenues by up to $ 100 billion per year.

With information from Bloomberg

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