Home Economy The US launched a new plan in the global corporate tax negotiations

The US launched a new plan in the global corporate tax negotiations


The Biden administration has proposed a new model to tax multinational corporations, calling on the world’s largest businesses to pay taxes to governments based on their sales in each country such as part of the global minimum tax agreement.

In a document sent to 135 countries to negotiate international taxes at the OECD in Paris and obtained by the Financial Times on Wednesday, the U.S. Treasury Department laid out a plan to apply to corporate global profits. the largest, including major US tech corporations, regardless of their actual presence in a given country.

The goal of the plan is to catalyze negotiations at the OECD, an international organization of rich nations, with the promise of a more stable international tax system that will prevent an increase in technical taxes. digital country and break the pattern of tax avoidance and profit shifting. by many multinational companies.

US concessions in the week of IMF and World Bank spring meeting as the White House calls for a US business tax increase to about $ 2.5 billion over the next 15 years to pay off more than $ 2 billion in investments in infrastructure, clean energy, and manufacturing.

After nearly a decade, the OECD tax negotiations have been split into two parts. The first pillar is designed to establish a new mechanism for taxing the largest multinationals, while the second is designed to address the global minimum tax, which The US has a target of 21%.

An OECD deal would allow Joe Biden’s administration to raise corporate taxes on American companies without fear of being cut back by other countries as it would include a widely applied global minimum tax rate.

If the U.S. plan is approved, other countries will be able to increase revenue from major U.S. tech corporations and other multinationals operating in their jurisdictions but paying little. business tax.

The offer from Washington reflects Biden’s broader goal of ending what officials have described as a race to the bottom in global taxes that deprives governments of the revenues needed to fund. basic investment and services.

International tax negotiations have been bogged down in the OECD for years because the US has opposed what it sees as an attempt by other countries to come up with discriminatory deals against multinationals. US companies, especially big US technology companies.

The Trump administration has insisted on a “safe harbor” clause that will make US technology groups voluntarily comply. Shortly after taking office this year, Biden dropped that need, but this week’s proposal offers a new solution.

The US Treasury Department is currently devising a different formula in which only the largest and most profitable companies in the world are subject to new rules, regardless of their sector, based on the level of Their revenue and profit margin. These companies will likely include around 100 companies, including major US tech corporations as well as other extremely large multinationals.

The proposals were shared with the OECD, which is convening negotiations and is trying to bring countries together to come up with the outlines of a global agreement over the summer.

Pascal Saint-Amans, head of the OECD’s tax administration, welcomed US proposals. “This restarted negotiations and was very active,” he said. “It’s a serious proposition with a chance of success in both [international negotiations] and the US Congress. Peace is more important than anything else and this will be stable [international corporate tax] in the post-coronavirus environment. “

Saint-Amans added that the proposal has the potential to increase as much revenue for other countries as the OECD’s own proposal while also allowing the US to raise the money it wants from its largest companies.

Many international tax campaigners argue that the OECD’s proposals do not go far enough or give enough power to raise taxes for emerging economies. The United States’ proposals have not significantly changed this feature, although US documents show that the United States is willing to be flexible on certain details.

An agreement would help settle a transatlantic trade dispute between the US and a number of countries that implemented a digital services tax in lieu of a broader multilateral agreement.

Washington has threatened to impose tariffs on countries including France, Great Britain, Italy and Spain – among others – on digital taxes, for which US tech companies are being demanded. pay, on the grounds that tax discrimination is unfair to US companies.

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