U.S. Assistant Secretary of the Treasury Wally Adeyemo said he expected strong support from G7 industrial democracies for the Biden administration’s proposed global minimum corporate tax of 15% or more, which in turn should help in gaining US Congress support for domestic corporate tax legislation consolidate.
“I have a feeling that there will be a lot of unified support among the G7 countries,” Adeyemo told Reuters on Monday after France, Germany, Italy and Japan supported the Treasury’s proposal. That support could be expressed at a face-to-face meeting of G7 finance ministers in London on June 4-5, Adeyemo said.
In 2017, the Trump administration and Republicans in Congress lowered the 2017 tax rate to 21% and introduced a minimum tax rate on foreign income from intangibles of 10.5%. The US global minimum tax proposal is expected to be a key topic of discussion at a preliminary meeting of G7 virtual finance leaders on Friday.
Adeyemo, who is involved in the OECD’s tax talks, expects broad international engagement of 15% or more to foster support from Congress for a US corporation tax increase by narrowing the gap between US and overseas tax rates. Once a higher US minimum is in place, it will provide incentives for other countries to turn to US course, he added.
“If we can get the world to say they are ready to do at least 15%, we will have the opportunity to return to the international conversation as soon as we are done with the national piece.”
The negotiators of the OECD tax talks this summer sought a fundamental agreement. At the time of a July G20 financial leaders meeting in Venice, Italy, there should be a good sense of unity over a global minimum tax structure, Adeyemo said. He added that there are many technical details to be worked out so a final agreement may have to wait until the G20 leaders meet in Rome at the end of October.