U.S. Treasury Secretary Janet Yellen said Sunday that the global corporate tax rate might not be ready for consideration by Congress until the spring of 2022, Reuters reported.
G-20 finance ministers and central bank governors endorsed a deal that would allow countries worldwide to tax large, profitable multinational corporations, but Yellen warned that a separate Organization for Economic Co-operation and Development (OECD) tax deal was on a “slightly slower track” than the proposed global corporate tax of 15% previously agreed upon by over 130 nations which she plans to introduce to Congress first, Reuters reported.
Leaders met in Venice, Italy, to discuss the changes, but Congress might face challenges in passing legislation because a two-thirds majority will likely be needed in the Senate for the international treaty, Yellen said, Reuters reported. Yellen’s comments at a news conference following the meeting suggested the tax adjustments and OECD tax deal might happen in a two-step process, which she broke down into two pillars.
“Congressional support…will hinge on protecting American workers and the U.S. tax base,” Republican Sen. Mike Crapo of Idaho, the senior Republican on the Finance Committee and Republican Rep. Kevin Brady of Texas, from the House Ways and Means Committee, wrote in a letter to Yellen on Thursday, the WSJ reported. “Other countries have shown that they will aggressively seek to gain market share and strip away our tax base, so U.S. negotiators must be equally aggressive in defending American interests.”
“I respect her a great deal,” Brady told reporters in regard to Yellen, but said, “I think there are too many competing interests here for them to finalize a deal that would be agreeable to Congress,” the WSJ reported.
My statement at the conclusion of the G20 Finance Ministers and Central Bank Governors Meetings: pic.twitter.com/eGICbPXrFy
— Secretary Janet Yellen (@SecYellen) July 10, 2021
The second pillar, which Yellen said she hoped would happen more swiftly was a minimum tax implemented into a budget reconciliation bill in Congress this year, which could be passed with a simple majority and without Republican support, Reuters reported.
The next step, referred to as the first pillar, might happen more slowly, Yellen said, Reuters reported. It would end unilateral taxes on digital services and implement a new system that would allow large companies, such as Google and Facebook to be taxed in places that they sell products and services and not just where they have headquarters or intellectual property, Reuters reported.
The OECD originally announced an October 2021 deadline to finish up technical details on the two-pillar approach, as well as a plan for implementation in 2023, according to a statement.
“After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere,” OECD Secretary-General Mathias Cormann said. “This package does not eliminate tax competition, as it should not, but it does set multilaterally agreed limitations on it
“It may be in ready in the spring of 2022 and we’ll try to determine at that point what’s necessary for its implementation,” Yellen said, Reuters reported.
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