U.S. Treasury Says G-7 Should Endorse U.S. Global Minimum Tax Proposal

First row (LR); The European Union’s High Representative for Foreign Affairs, Josep Borrell, the British Foreign Minister Dominic Raab, the United States Secretary of State Antony Blinken, (middle row from left to right) The German Federal Minister for Foreign Affairs Heiko Maas, Japanese Foreign Minister Motegi Toshimitsu and Canadian Foreign Minister Marc Garneau, back row (LR); Italian Foreign Minister Luigi Di Maio and French Minister for Europe and Foreign Affairs Jean-Yves Le Drian pose for a family photo on the stairs of Lancaster House in London ahead of bilateral talks at the ministers meeting G7 Foreign Affairs and Development Committee on May 4, 2021 in London, England.

Stéphane Rousseau | Getty Images

The wealthy G-7 democracies are expected to approve Washington’s proposal for an ambitious global minimum corporate tax when their leaders meet later this week in Britain, a US Treasury official said on Wednesday. The official said in an emailed statement that the Treasury expects the Group of Seven finance ministers’ meetings on Friday and Saturday in London to provide momentum to move global business tax negotiations forward towards a larger G-20 finance meeting in July in Italy.

Full approval is expected at the culmination of G-7 meetings with the leaders’ summit, the official added.

The US Treasury proposed a global minimum corporate tax of at least 15% in May in an attempt to stop a downward spiral in corporate tax rates and deter multinational companies from shifting profits to countries paradisiacal.

The proposed minimum is lower than the Biden administration’s own proposals to increase the domestic corporate tax rate to 28% and impose a minimum 21% levy on overseas profits made by U.S. companies.

Assistant Treasury Secretary Wally Adeyemo told Reuters in late May he expected strong support from G-7 countries for the U.S. minimum tax proposal, and said it would help build support to Biden’s tax plans among U.S. lawmakers.

A number of other G-7 officials have raised expectations for finance ministers’ meetings in London, the first face-to-face meetings for the group since the Covid-19 pandemic made the meetings virtual the last year.

German Finance Minister Olaf Scholz told Reuters in an interview that he expects the group to make “significant progress” on corporate tax issues, especially the thornier issue of l agreement on how to tax large global digital service companies such as Facebook, Amazon.com, Alphabet Inc. Google, Apple Inc and Microsoft.

A number of countries have imposed unilateral taxes on digital services targeting these companies, prompting threats of tariff retaliation from the United States.

The United States has insisted that any tax regime for these companies does not discriminate against American companies and that all individual taxes on digital services be banned. Instead, he proposed targeting the 100 biggest and most profitable companies to pay more taxes in the countries they do business in, regardless of their industry classification and business model.

UK Finance Minister Rishi Sunak told Reuters on Wednesday that the US plan to target the top 100 companies could work, but said big tech companies should be part of that group and pay more taxes where they operate.

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