In a declaration of war on low-tax jurisdictions around the globe, US Treasury Secretary Janet Yellen, Has urged the world’s 20 advanced nations to move in the direction of adopting a minimum global corporate income tax. She said the move attempted to reverse a 30-year race to the bottom in which countries have resorted to slashing corporate tax rates to attract multinational corporations.
What’s the plan
The US proposal envisages a 21% minimum corporate tax rate, Coupled with cancelling exemptions on income from countries that do not legislate a minimum tax to discourage the shifting of multinational operations and profits overseas.
One of the reasons the US is pushing for this is purely domestic. It aims to somewhat offset any disadvantages that might arise from the Biden administration’s proposed increase in the US corporate tax rate. The proposed increase to 28% from 21% would partially reverse the previous Trump administration’s cut in tax rates on companies from 35% to 21% by way of a 2017 tax legislation.
More importantly, the US proposal includes an increase to the minimum tax that was included in the Trump administration’s tax legislation, from10.% to 21%