US Treasury’s Yellen calls for global minimum corporate tax

US also to hit six nations that tax American internet-based companies with tariffs

US Treasury Secretary Janet Yellen said on Monday that she is working with G20 countries to agree on a global corporate minimum tax rate to end a “30-year race to the bottom on corporate tax rates”.

In prepared remarks to the Chicago Council on Global Affairs, Ms Yellen said she also would use her participation in International Monetary Fund and World Bank annual meetings this week to advance discussions on climate change, improve vaccine access and encourage countries to support a strong global recovery.

Ms Yellen said it was important to make sure governments “have stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government”.

Separately, a US Treasury official told reporters that it was important to have the world’s major economies on board with a global minimum tax to make it effective.

The official said the United States would use its own tax legislation to prevent companies from shifting profits or residency to tax haven countries and would encourage other major economies to do the same.

Tariffs

Meanwhile, the US is pressing ahead with plans to hit six nations that tax internet-based companies with retaliatory tariffs that could total almost $1 billion (€850 million) annually.

Goods entering the US – ranging from Austrian grand pianos and British merry-go-rounds to Turkish Kilim rugs and Italian anchovies – could face tariffs of as much as 25 per cent annually, documents published by the US Trade Representative show.

The duties are in response to countries that are imposing taxes on technology firms that operate internationally such as Amazon. com and Facebook.

In each of the six cases, the USTR proposes to impose tariffs that would roughly total the amount of tax revenue each country is expected to get from the US companies. The cumulative annual value of the duties comes to $880 million, according to Bloomberg News calculations.

There have been efforts to replace each individual country’s digital taxes with one global standard – to be brokered by the Organization for Economic Cooperation and Development – but a deal has yet to be reached.

Maintain its options

The US says it’s committed to the OECD process, but will maintain its options, including tariffs, in the meantime, USTR Katherine Tai said i on March 26th.

The Internet Association – whose members include Amazon, Facebook and Alphabet's Google – welcomed the USTR's move.

The USTR’s action “is an important affirmation in pushing back on these discriminatory trade barriers as the US continues to work to find a viable solution at the OECD,” the group said in a statement.

The USTR has invited public comment on its plans to go ahead with the tariffs, and will hold public hearings at the start of May. – Reuters and Bloomberg