World tax overhaul wins broad consensus
The Biden administration and global allies scored a major victory Thursday in their push for a more balanced international corporate tax system, but still face multiple significant obstacles to completing an ambitious plan that has been years in the making.
The boost came during a round of talks hosted by the Organization for Economic Cooperation and Development, where 130 countries and jurisdictions backed a plan to set a minimum corporate tax rate and establish a new regime for sharing the taxes imposed on the profits of multinational firms.
Even as governments hailed the news the agreement remains well short of a done deal. A handful of countries refused to sign on. Most important, resistance came from three European Union members, any of which could prevent the 27-member bloc from implementing the plan.
The U.S. Congress could also prove a major obstacle, since the legislature's approval would be required to formalize Washington's participation in the system, and President Joe Biden's Democratic party holds razor-thin majorities that are at risk in next year's midterm elections.
Thursday's deal also leaves several details in the proposals unresolved, including important questions over how and when some countries' unilateral taxes on tech firms' revenue will be rolled back.
All that casts next week's meeting of Group of 20 finance ministers in Venice in a new light, freeing officials to focus more on topics such as containing the COVID-19 pandemic rather than struggling to reach a deal on taxes. It could also represent a chance for senior officials to get on immediately with unfinished tax business.
The overhaul is aimed at helping countries share the spoils from multinational firms like Facebook Inc. and Alphabet Inc.'s Google, with implementation targeted for 2023. The rules would curtail tax avoidance by making global enterprises pay an effective rate of “at least 15 per cent” and give smaller countries more tax revenue from foreign firms.