Corporate tax: the United States formalizes its proposal for an overall corporate rate of 15% at the OECD | Economy

The Joe Biden administration has offered its partners in the Organization for Economic Co-operation and Development (OECD) an overall corporate rate of at least 15%, the Treasury Department said on Thursday in a statement. The text describes as encouraging the reception of the proposal for a “new international tax architecture” by its partners.

The percentage is lower than the 21% that the OECD initially aspired to. The Treasury announcement stresses that 15% is a threshold after which “more ambitious” efforts can take place and that this rate can be “increased” to end the downward race recorded over the past 30 years. This is one of the proposals the OECD has been working on for a long time, without results to date.

Washington has promoted negotiations within the framework of the OECD to put in place harmonized taxes between different countries on the profits of large companies, with the aim of preventing them from fleeing to countries like Ireland or the Bahamas, which offer favorable tax conditions. Harmonization is of particular concern for these destinations, fearing that large companies will no longer be encouraged to invest. The Biden government reiterated that a “zero” global corporate tax has sparked a race to the bottom of corporate rates, undermining countries’ ability to raise revenues to make the necessary investments.

The OECD hopes to reach a global agreement in principle at the G20 Finance Summit, scheduled for July 9-10, as a preliminary step to finalize the final mechanism at a final meeting in October. Preliminary negotiations are taking place within the framework of the project against the erosion of the tax base of multinationals (BEPS, in its English acronym).

US Treasury Secretary Janet Yellen has repeatedly advocated for the proposal. It is important to ensure that “governments have stable tax systems that collect sufficient revenue and that all citizens fairly share the financial burden of government,” he said in April.

At the same time, at home, Biden has proposed raising the current 21% corporate tax – in effect since Trump’s 2017 tax reform – to 28%, although more moderate or centrist Democrats favor a percentage of about 25%. With this increase, the Democratic President intends to partially finance his ambitious infrastructure plan.

By way of reference, in Ireland, home of many multinationals, a rate of 12.5% ​​prevails, while neighboring countries such as France and Germany favor 21%. The final objective pursued by the harmonized increase in the tax is to increase the contribution of the tech giants to the public funds of their respective countries, hence the specific interest of the United States, the seat of most of between them. President Joe Biden has come to specifically refer to the case of Amazon, which he accuses of having evaded its tax obligations in his country thanks to the tax advantages of other countries.

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