© Reuters. FILE PHOTO: The United States Department of the Treasury is seen in Washington, DC, US August 30, 2020. REUTERS / Andrew Kelly / File Photo
By David Lawder
WASHINGTON (Reuters) – The U.S. Treasury Department said it had proposed an overall minimum corporate tax rate of at least 15% in Thursday’s international tax negotiations, backing down from its previous call for a minimum rate of 21%.
The department said the proposal was made at a meeting of the Organization for Economic Co-operation and Development (OECD) fiscal steering group on base erosion and profit shifting.
“The Treasury has proposed to the steering group that the overall minimum tax rate be at least 15%,” the department said in a statement. “The Treasury stressed that 15% is a floor and that the discussions should continue to be ambitious and push this rate higher.”
U.S. Treasury Secretary Janet Yellen first proposed a 21% global minimum corporate tax in April as part of President Joe Biden’s $ 2.2 trillion infrastructure spending proposal, which would be funded in large part by increasing the US corporate tax rate to 28% from the current 21%.
Some countries, notably France and Germany, supported the US proposal for a minimum rate as high as 21%, but other countries saw this level as too high.
Previous discussions on the OECD minimum tax have centered around 12.5% - the same rate applied by Ireland.
The Treasury Department said officials in its Office of Fiscal Policy were “encouraged by the positive reception of its proposals and the unprecedented progress made towards establishing a global minimum tax.”
He proposed a global minimum tax as a way to minimize the impact of a higher US tax rate on the competitiveness of US businesses and to deter them from shifting operations or profits to low-tax jurisdictions.
Yellen had said she wanted to end ’30-year race to the bottom on corporate tax rates’ at a time when governments have spent billions of dollars on COVID-19 relief measures .
The Treasury Department said it made it clear at the OECD meeting that a global minimum tax rate “would ensure the prosperity of the world economy on the basis of a more level playing field.”
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