The US Treasury Department has decided to back down from its initial 21% global minimum corporate tax rate, and instead proposed a minimum rate of 15% during Thursday’s OECD international tax negotiations.
The latest proposal, led by Treasury Secretary Janet Yellen, was made during an OECD tax group meeting regarding profit shifting and base erosion. “Treasury proposed to the steering group that the global minimum tax rate should be at least 15%,” the Treasury department said in a statement. “Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher,” the statement added.
Back in April, Yellen initially proposed a 21% global corporate minimum rate as part of President Joe Biden’s $2.2 trillion infrastructure spending plan, which would be predominantly paid for by raising the domestic corporate tax rate from the current 21% to 28%. Although a handful of countries backed Yellen’s global tax hike proposal— particularly Germany and France— other countries considered the rate too high.
Thursday’s proposal is expected to be followed by an upcoming June meeting of Group of Seven finance chiefs that will establish s new forum for major economies to create a consensus. The Biden administration is also anticipating to enact an OECD deal that would set a global minimum rate before Democrats make their domestic corporate tax proposal to Congress. The administration is calling on raising the domestic rate to 28%, up from the 21% enacted during former President Donald Trump’s term.
Information for this briefing was found via the OECD. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.