White House economic adviser Mr. Brian Deese said that the US was still trying to convince more countries to join a global corporate minimum tax of at least 15% that was signed this week by 130 countries.
The agreement is expected to create momentum for Joe Biden’s campaign to boost corporate tax rates at home, while also raising income for a range of expenditures, according to Mr. Deese.
The agreement was established in an attempt to solve the issues posed by a globalized and more digital world economy in which profits can be moved across borders and companies can make online profits in locations where they do not have a taxable headquarters.
“This is a process. We’ve going to keep working on it. We’re not there. This is a milestone in the process, but a real strong signal of momentum toward the ultimate goal,” said Mr. Deese.
Recently, officials from 130 of the 139 nations participated in the Organization for Economic Cooperation and Development (OECD)-led discussions where they agreed to a major revamp of taxation laws for multinational corporations.
Ireland, Hungary, and Estonia were among the holdouts, all of which are members of the European Union and have tried to lure investment by lowering their tax rates.
Based on the agreement, nations could charge their companies’ foreign earnings up to 15% if they go untaxed through subsidiaries in other countries. Since profits would be taxed at home anyway, there would be no incentive to employ accounting and legal techniques to shift profits to low-tax countries where they conduct little or no business.
According to the OECD, an implementation plan and other outstanding concerns will be addressed by October, with this deal anticipated to go into effect in 2023.