The plan, which has already been sent to the 135 countries that are negotiating a global tax framework in the OECD, also includes the setting of a minimum corporate tax, the same in all countries, which the United States wants to see at 21% , well above the current proposals that stand at 12.5%.
The Financial Times, which had access to the documents, explains that the objective is to cover the large multinationals, including the United States’ technology companies, and their profits in each geography where they obtain revenues, regardless of their physical presence in the country.
The Biden administration’s proposal thus departs from the current options, which seek to define which business models and sectors would be subject to tax, with an emphasis on technology and other businesses that interact with consumers.
The US proposal, on the contrary, implies a comprehensive model that would apply to multinational companies in all sectors, and not just to digital businesses.
At the moment, after almost a decade, negotiations in the OECD are divided into two parts, the first pillar of which concerns the definition of a new tax regime for the largest multinationals, and the second pillar of the introduction of a global minimum tax rate. .
However, the negotiations were paralyzed for years, because the United States was opposed to what it considered attempts by other countries to enter into agreements that discriminated against American multinationals, especially large technology companies. The Trump administration insisted on introducing a security clause in an eventual agreement that would make compliance by U.S. technology groups voluntary.
This requirement was immediately abandoned by Biden as soon as he took office, and his plan now offers a different solution, in which only the largest and most profitable companies in the world would be subject to the new rules, regardless of their sector, based on their level of revenue and profit margins. The Financial Times said that it would cover about 100 companies, including the large US technology companies, as well as other large multinationals.
With this new plan, the United States intends to break the deadlock and guarantee a more stable global taxation system, which would halt the proliferation of national digital taxes and which would put an end to the tax evasion and profit transfer schemes of many multinationals.
Italy and Spain applaud US effort
The United States proposal received strong support this Thursday from Mario Draghi, the prime minister of Italy, who also chairs the G20 this year.
Draghi said he “fully” supports the United States’ call for the introduction of a global minimum corporate tax. Since Italy was one of the countries that introduced a digital tax, the country’s support for US proposals is seen as important to ensure a broader consensus.
Nadia Calviño, Spain’s Economy Minister, told Bloomberg that it is very encouraging that Washington is “back” at the negotiating table and that it expects a deal in the summer. However, the official stressed that the details of the “very important” proposal have yet to be analyzed.
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