Treasury Secretary Janet Yellen on Saturday praised President Joe Biden and the other heads of state at the G-20 conference in Rome for formally adopting a 15% global corporate minimum tax rate that is estimated to bring in $150 billion a year globally.
"Today, every G20 head of state endorsed an historic agreement on new international tax rules, including a global minimum tax that will end the damaging race to the bottom on corporate taxation," Yellen said in a statement Saturday. "It's a critical moment for the U.S. and the global economy. I congratulate President Biden on this important achievement.
"This deal will remake the global economy into a more prosperous place for American business and workers. Rather than competing on our ability to offer lower rates, America will now compete on the skills of our people, our ideas, and our capacity to innovate — which is a race we can win."
The G-20 member nations, including the United States, China, France, Russia, and the United Kingdom, among others, are a mix of nations that have the largest economies in the world, representing about two-thirds of the world's population, 85% of the global domestic production, and 75% of global trade, according to the organization.
At Saturday's meeting in Rome, leaders spoke out in support of establishing a global minimum corporate tax rate of 15% that would be formally approved in a statement from the conference Sunday, and then would go to each individual nation to enact on their own.
According to a Reuters report, rules for the tax would be implemented by 2023, and would apply to large multi-national corporations like Google, Amazon, Facebook, Microsoft, and Apple, making it harder for them to establish offices in countries with a lower tax rate.
The adoption by the G-20 on Saturday comes after 136 nations agreed to a deal earlier this month on the 15% global rate.
"We call on the Organization for Economic Cooperation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting to swiftly develop the model rules and multilateral instruments as agreed in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023," the draft conclusions, seen by Reuters, read.
According to Forbes, the 15% rate will apply to multi-national companies with annual revenues of $865 million or more, and require companies that turn over $23 billion and have profit margins of 10% or more to pay taxes in the countries they sell goods or services in.
In the United States, Congress still must approve legislation to comply with the agreement, which could be tricky because America is home to 2,000 of the world's largest multinational corporations.
Biden has been pushing to get the deal approved because it might prove a key revenue resource to help pass his two large legislative packages on infrastructure and his Build Back Better budget reconciliation bill.
Both plans, which could top $2-3 trillion in their final forms, are currently jammed in Congress with Democrats battling over what should be included in the bills, and what could be stripped out to reduce the price tag.
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