US Treasury Secretary Janet Yellen, who has spearheaded efforts to agree global corporate tax rules, confirmed that the proposed minimum rate of 15% will not be reconsidered.
“I think we have agreed that 15% is the global minimum tax. Now, of course, individual countries may choose themselves to establish a higher tax, but I expect many countries to adopt a 15% tax,” she said.
“It works for many countries. I don’t think that’s something that's going to be reconsidered as a global minimum."
Welcomed by all?
Yellen was speaking in Dublin, where she met with Ireland’s finance minister Paschal Donohoe. She is also attending several engagements that will focus on the global corporate tax deal endorsed by the G20 over the weekend.
Ireland, which has successfully attracted companies by applying a corporate tax rate of 12.5% is set to lose an estimated €2bn per year in tax receipts as a result of the new minimum rate.
However, she maintained that that the increase should be widely welcomed, including by low-tax locations such as Ireland. “My perspective isn’t that this agreement is damaging small countries or emerging market countries,” Yellen added. “I think that globally we have seen over many decades, countries throughout the world involved in a process that has hurt workers and households in all of our countries.
“It has deprived all of us of the revenue that we bring to invest in our infrastructure, invest in our people, invest in research and development, the investments that really promote growth. We’ve had a so-called race to the bottom in terms of corporate taxation, and no country has really won that race.
Yellen added that countries from lowering their tax rate on an ongoing basis was to introduce a global minimum corporate tax rate so that “corporations here in Ireland and the United States and around the world are bearing their fair share of the tax burden”.
Early last month Ireland agreed to sign up to a proposal from the Organisation for Economic Co-operation and Development for a global 15% floor on corporation tax but was only persuaded at the last minute when the phrase “at least” was removed from the agreement. The Irish government had was worried that its inclusion would allow the EU to raise the minimum rate at a later date.
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