U.S. drops ‘safe harbor’ demand, raising hopes for global tax deal

U.S. drops ‘safe harbor’ demand, raising hopes for global tax deal

News: U.S. drops ‘safe harbor’ demand, raising hopes for global tax deal.

WASHINGTON (Reuters) – US Treasury Secretary Janet Yellen told G20 officials that Washington had dropped the Trump administration’s proposal to exclude some companies from new global digital tax rules.

“Secretary Yellen announced that we will be working intensively on both pillars of the OECD project and that the United States is no longer committed to the implementation of Pillar 1 in the safe haven,” said a US treasurer.

The already questioned multilateral talks on reforming global taxation within the Organization for Economic Co-operation and Development stalled after former Treasury Secretary Steven Mnuchin insisted on the controversial measure in late 2019.

Tax experts and finance officials around the world had warned that the US proposal could have allowed big US companies like Amazon, Alphabet’s Google, and Google Facebook to unsubscribe from what has been agreed internationally.

Yellen’s statement to G20 finance ministers and central bankers was largely welcomed by European officials.

Federal Finance Minister Olaf Scholz described the US move as a major breakthrough that could pave the way for a more comprehensive agreement.

“My US colleague Janet Yellen told G20 finance ministers today that the United States would participate and that the new rules for fair international taxation should be binding on all companies,” he said in a statement after the meeting.

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He said Yellen had advised G20 officials that Washington also intends to reform US minimum tax rules in line with an OECD proposal for a globally effective minimum tax.

“This is a big step forward on the way to an agreement between the participating countries by the summer,” said Scholz.

French Finance Minister Bruno Le Maire reiterated his praise, saying an agreement to revise cross-border corporate tax rules was now within reach by the summer deadline.

In a letter to G20 officials published on Thursday, Yellen underscored the Biden government’s commitment to multilateral discussions on the global tax problem, “overcoming disagreements and finding workable solutions in a fair and reasonable manner.”

A G20 official said Yellen’s announcement was “certainly a positive signal”.

Reporting by Andrea Shalal in Washington, Michael Nienaber in Berlin, Leigh Thomas in Paris and Jan Strupczewski in Brussels; Adaptation by Jonathan Oatis

Original Source © Reuters

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