US proposal lifts hopes for global minimum tax deal

23 May, 2021 12:00 AM printer

LISBON: The US breathed new hope into global tax talks with a proposal, welcomed by Germany and France on Friday, to set a minimum rate of 15 percent on profits of multinationals worldwide.

Washington floated the idea Thursday as part of US President Joe Biden’s push to find an agreement with major economies on imposing a shared minimum corporate rate to end a race to lower taxes, reports AFP.

France and Germany are the eurozone’s biggest economies and their support is key at talks taking place on the subject at the Organization for Economic Cooperation and Development and G20.

Arriving for a meeting with eurozone counterparts in Portugal, French Finance Minister Bruno Le Maire said Paris “can live with 15 percent, it can be a good compromise”.

However, “the key question is not the figure”, Le Maire said, insisting that a quick political agreement was key and needed no later than a G20 meeting in Italy in July.

German Finance Minister Olaf Scholz hailed the US proposal as a “breakthrough” that brought negotiations to a “point where we can see that we will make it”.

The OECD negotiations are intended to stop what Washington calls a “race to the bottom” among countries to see who can offer the lowest rate.

In Europe, France and Germany are key backers of the idea, but questions remain from smaller EU member states whose economies depend on keeping taxes low to attract big companies.

The 15-percent tax rate is lower than in many Western countries—France plans to lower its tax on corporate profits to 25 percent by 2022, while the US wants to raise its own from 21 percent to 28 percent, for example.

But it is higher than in Ireland, which is at 12.5 percent and which gives big firms rates even lower than that, as well as in Bulgaria or Hungary.

“The discussions are still open,” said Pierre Gramegna, Luxembourg’s finance minister, whose low-tax country is headquarters for Amazon and other multinationals.

“As long as it is a common agreed level for all of us, it makes life easier for everybody,” he added.