FILE PHOTO: U.S. Treasury Secretary Janet Yellen answers questions during the Senate Appropriations Subcommittee hearing to examine the FY22 budget request for the Treasury Department on Capitol Hill in Washington, DC, U.S., June 23, 2021. Greg Nash/Pool via REUTERS
July 6, 2021
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen will press G20 counterparts this week for a global minimum tax rate above the 15% floor agreed by 130 countries last week, but a rate decision is not expected until future phases of OECD negotiations, U.S. Treasury officials said on Tuesday.
The officials also said they plan to make clear that a new digital levy expected to be proposed by the European Commission in the coming weeks to fund recovery from COVID-19 is inconsistent with European Union commitments to the OECD framework agreement signed on July 1.
The agreement, which includes all G20 countries, requires elimination of digital services taxes in favor of a new reallocation of some taxing rights on large, high-profit multinational firms to market countries from those housing headquarters and intellectual property. It could take until after 2023 to implement it.
European Commission executive vice president Margrethe Vestager told Reuters that the levy would be paid largely by European companies to repay 750 billion euros ($886 billion) in borrowing for a post-pandemic recovery fund.
The Treasury official did not say what response the United States would take if the EU proceeds, adding that any new unilateral digital levies should not be implemented until final rules on international taxing rights are worked out.
The U.S. Trade Representative’s office is maintaining active threats of retaliatory tariffs against several countries with digital services taxes that are suspended through November to allow for an agreement to be finalized.
After a video call between Yellen and Vestager on Tuesday, the European Commission issued a statement saying the two had a “good and constructive first exchange” on digital taxes and international tax negotiations.
The officials said that the Biden administration will need the support of Congress for implementing portions of the agreements on a digital tax. They added that Yellen is working with the U.S. Senate Finance Committee and the House Ways and Means Committee to include provisions in budget reconciliation legislation to implement the international tax agreements.
Democrats in Congress have said they plan to pursue such legislation, expected to include new social program investments and tax increases on U.S. corporations and wealthy Americans, without Republican votes if necessary.
(Reporting by David Lawder and Andrea Shalal, Editing by Franklin Paul and Barbara Lewis)
Source: One America News Network
