The new Secretary of the Treasury of the United States, Janet Yellen, has advanced this Monday that she will soon transfer to the G-20 countries a proposal to harmonize corporate tax worldwide at 28%, seven percentage points more than the tax that applies today to the US.
The US Secretary of the Treasury wants to set this tax at 28% in the main economies of the world
The goal of agreeing on a global minimum corporate tax rate, Yellen explained at the Chicago Global Affairs Council, is to end a “30-year race to the bottom” between different countries. It would also contribute to “ending tax competition” between regions.
It is important, in Yellen’s view, that governments “have stable tax systems” that generate sufficient revenue to pay for essential public goods, respond to crises, and make all citizens equally share the burden of financing public goods. state. For this tax to be really effective, she added, the world’s main economies would have to row in the same direction and agree on a common rate.
US Treasury sources have assured, according to Reuters, that the country would use its own tax legislation to prevent companies from transferring their profits or their residence to tax havens, and that it would encourage other countries to do the same.
Corporation tax, during the Administration of former President Donald Trump, fell from 35% to 21% today. Now, as part of his stimulus plan, President Joe Biden plans to raise taxes on multinationals operating in the country to 28%. A common rate in the main economies of the world would therefore prevent large US-based companies from leaving the country for other more attractive regions, given that the global average for companies is 24%.
Harmonizing corporate tax at the global level is another issue being debated within the framework of the Organization for Economic Cooperation and Development. The OECD is studying approving a digital tax for multinational companies in the sector (known as the Google tax), but it also wants to reach a consensus on a minimum level of corporate tax on a global scale.
Along these lines, the Secretary of the Treasury already advanced in a statement to the leaders of the G-20 last February that it was committed to advancing with the popularly known as Google rate, confirming the turn of the script against the Trump administration, strongly contrary to multilateralism in the taxation of large multinationals.
Recovery
Yellen has also acknowledged that, over the past year, most advanced countries have successfully supported their economies during the Covid-19 pandemic. However, he recalled that “it is still too early to speak of victory”, so countries have to continue with “the strong fiscal effort and avoid withdrawing support too soon to promote a solid recovery” and help prevent the emergence of global imbalances.
