A Global Deal Aimed at Ending Tax Havens Gains Momentum

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Negotiators are submitting a minimum tax rate of around 15 percent, which could be announced at Friday’s meeting.

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WASHINGTON – The most sweeping change to the international tax system in a century is set to take a significant step forward this week, with nearly 140 countries, including Ireland, expected to settle on a 15 percent global minimum tax rate.


Negotiators were on the verge of agreeing a rate on Thursday ahead of Friday’s meeting at the Organization for Economic Cooperation and Development, which is coordinating global tax talks. The tax rate has been the subject of intense conversation for months. If enacted, it could help end the decades-long race over corporate taxation that has allowed tax havens to flourish and drained countries of revenue.

Governments have been discussing this type of tax overhaul for years; Negotiations gained momentum this year under the Biden administration, which is also pursuing changes to its domestic corporate tax rate. The framework in question includes a global minimum tax of 15 percent that each country will adopt, and new rules that will force technology giants like Amazon and Facebook and other large global businesses to pay taxes in countries where their goods or services are sold. even though they have no physical presence there.

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Ahead of Friday’s meeting, negotiators are on the language of a joint statement describing the tax rate, exceptions for certain types of companies, and the implementation period, which some nations want to prepare for years. European holdouts such as Ireland, Hungary and Estonia have been under intense pressure in recent months to join the agreement, which would require the approval of 27 EU countries.

After weeks of heated negotiations and pressure from the United States and France, Ireland, a main holdout to the deal, said it was ready to accept a 15 percent minimum tax rate when Prime Minister Michael Martin on Thursday Told the cabinet that the rate applied only to multinationals such as Facebook and Apple, but not to Irish companies operating in Ireland.

Ireland’s finance minister, Pascal Donohoe, said: “I believe where we are now balanced and represents a fair agreement, reflecting the interests and input of many of the countries involved in the negotiations.” said on thursday.

At stake is Ireland’s low official corporate tax rate of 12.5 percent and a tax system that has helped global companies based there avoid paying taxes to other countries where they make profits. It has poured billions of euros into Ireland’s tax coffers and created hundreds of thousands of jobs.

Mr Donohoe said small domestic companies with annual revenues of less than 750 million euros would be exempt from the higher tax, or 160,000 businesses in Ireland.

People with knowledge of the talks said that while the 15 percent rate was essentially a bargain, some of the world’s largest countries continued to fight for a waiver to lessen its impact on the long-standing economic model, which has stymied investment. helped attract and generate employment.

“I am absolutely determined to pave the way for consensus as we are a millimeter away from a global agreement on a new international taxation system for the 21st century,” French Finance Minister Bruno Le Maire said on CNBC on Wednesday. ” “Of course, some member states are asking for a delay, the implementation period, for a transition period; We are fully prepared for such offers.”

Despite growing support for the agreement, concerns remain about how it will be implemented and whether it will be implemented uniformly around the world.

India, China, Estonia and Poland have said the minimum tax could hurt their ability to attract investments with special lures such as research and development credits and special economic zones that offer tax breaks to investors. For example, China has long used special economic zones with low tax rates to attract foreign investment, which has been a boon to its economic growth.

The United States has been one of the most vocal supporters of the deal, but it also faces challenges in ensuring that the Biden administration’s commitments are implemented by Congress. Mr. Biden’s economic agenda is in limbo, and Democrats are trying to figure out how to proceed through changes to the tax code that will ensure the United States is in compliance with the international agreement he seeks to broker. is trying.

The Treasury Department declined to comment on the details of the agreement, noting that talks are still ongoing, but expressed optimism that a deal would be finalized at a meeting of the leaders of the Group of 20 countries in Rome later this month. will be given.

Treasury Secretary Janet L. Yellen is “laser focused on the progress being made to finalize a historic deal, and expects countries to unite around the final standards of a new international tax regime,” said Alexandra Lamanna, a Treasury spokeswoman. He said the deal would help create more jobs and investment in the United States and benefit workers.

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