×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: Biden Administration | Joe Biden | Global Taxation

9 Countries Rejected Global Minimum Tax, Possibly Killing Deal

9 Countries Rejected Global Minimum Tax, Possibly Killing Deal
President Joe Biden speaks at an event on COVID-19 response July 6, 2021 in Washington. (Alex Wong/Getty Images)

By    |   Tuesday, 06 July 2021 04:09 PM

Though the tentative agreement between 130 countries for President Joe Biden's proposed 15% global minimum tax on corporations was hailed last week by Treasury Secretary Janet Yellen, nine countries involved in the talks rejected it, possibly putting the tax in jeopardy.

The nine nations that are part of the Organization for Economic Cooperation and Development not signing onto the agreement are Barbados, Estonia, Hungary, Ireland, Kenya, Nigeria, Peru, Sri Lanka, and St. Vincent and the Grenadines.

That rejection could kill the deal, Fox News reported, especially if the three countries that are members of the European Union — Estonia, Hungary and Ireland — don't change their minds. The EU may require a unanimous decision of its members to move on the issue.

Ireland has a 12.5% corporate tax rate, and says it has reservations about the deal. Still, it says it is open to continuing talks and could still support an agreement.

"I was not in a position to join the consensus on the agreement and specifically a global minimum effective tax rate of 'at least 15%' today," Irish Finance Minister Paschal Donohoe said. "I have expressed Ireland’s reservation, but remain committed to the process and aim to find an outcome that Ireland can yet support."

Hungary, with only a 9% corporate tax rate, was more strongly opposed.

"The global minimum tax would obstruct economic growth, the planned 15% tax rate is too high and it shouldn’t be levied on real economic activity," Finance Minister Mihaly Varga said.

Estonian officials indicated they were not ready to "fully endorse" the deal.

European Commission officials have said they expect a deal among its members to be completed by October.

"We’re confident that as the technical details of the proposals are further developed over the coming months, the remaining member states will be able to sign up to the agreement," EU spokesman Daniel Ferrie told Bloomberg News.

The agreement announced Thursday is an attempt to address challenges presented by a globalized and increasingly digital world economy in which profits can be relocated across borders and companies can earn online profits in places where they have no taxable headquarters.

The deal calls for a global minimum tax of at least 15%, a key element pushed by Biden as he seeks to raise more revenue for his infrastructure and clean energy plans. Technical details still need to be worked out, and it would be at least 2023 before the agreement takes effect.

Countries led by France have already started imposing unilateral digital taxes aimed at U.S. tech giants such as Amazon, Google and Facebook; under the deal, they would agree to withdraw those taxes, regarded as unfair trade practices by the U.S., in favor of the global approach.

The French tax on tech giants prompted retaliatory tariffs under former President Donald Trump, and France has welcomed the Biden administration’s push to reach a global deal.

"For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response," Yellen said in a statement. "The result was a global race to the bottom: Who could lower their corporate rate further and faster?"

Yellen said lower rates have deprived countries of money for infrastructure, education and efforts to fight the pandemic.

Under the deal, countries could tax their companies' foreign earnings up to 15% if they go untaxed through subsidiaries in other countries. That would remove the incentive to use accounting and legal schemes to shift profits to low-rate countries where they do little or no business, since the profits would be taxed at home anyway. Such tax avoidance practices cost countries between $100 billion and $240 billion in lost revenue annually, according to the Organisation for Economic Co-operation and Development.

The Associated Press contributed.

© 2021 Newsmax. All rights reserved.


Newsfront
Though the tentative agreement between 130 countries for President Joe Biden's proposed 15% global minimum tax on corporations was hailed last week by Treasury Secretary Janet Yellen, nine countries involved in the talks rejected it, possibly putting the tax in jeopardy.
Global Taxation
630
2021-09-06
Tuesday, 06 July 2021 04:09 PM
Newsmax Media, Inc.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
 
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
© Newsmax Media, Inc.
All Rights Reserved