Janet Yellen, the US treasury secretary, has urged other countries to join Washington in ushering a new regime of global minimum corporate tax rate.
“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth and prosperity,” Yellen said during her speech to the Chicago Council on Global Affairs on Monday (5 April).
Yellen said that the US is working with other G20 nations to develop and implement a global minimum tax, which she said would “stop the race to the bottom” and foster more equitable economic growth among countries and regions.
On Mar 31, President Joe Biden unveiled his plan to plough $2.3 trillion into government spending on infrastructure. Biden proposed to support the plan by raising the corporate tax rate from 21 per cent to 28 per cent to mop up $2 trillion to fund it.
Global minimum tax plan is crucial to funding the administration’s $2.3 trillion infrastructure proposal as Biden's plan proposes to impose a 21 per cent minimum tax on US companies’ foreign income, remove export incentives and increase taxes on some foreign companies’ U.S. operations.
If the U.S. raises its tax rates and imposes greater burdens on U.S. companies’ foreign profits, a global minimum tax regime would help prevent companies based in other countries from having a significant potential advantage.
In late 2017, the Trump Administration lowered the US corporate rate for multinationals to 21 per cent from 35 per cent.
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