US Treasury Secretary, Janet Yellen, has welcomed EU agreement on implementation of a global minimum tax on corporations.
EU member states, on December 12, reached agreement to implement a minimum tax rate for large businesses at the EU-level. An EU directive in this regard is likely to be transposed into member states’ national law by the end of 2023.
The measure is aimed at limiting the race to the bottom in corporate tax rates. The profit of the large multinational and domestic groups or companies with a combined annual turnover of at least EUR 750 million will be taxed at a minimum corporate tax rate of 15 percent.
“I welcome the decision by all 27 member states of the European Union to adopt a Directive implementing a global minimum tax on corporations. This momentous act means that the OECD/G20 Inclusive Framework political agreement on international tax will be implemented by one of the world’s leading economic groupings,” Yellen said.
Yellen added: “The rules we agreed on last year at the OECD/G20 Inclusive Framework will reform the international tax system and make it fit for purpose for the 21st century.”
She continued: “The United States led the world in being the first to adopt a minimum tax on the foreign earnings of domestically parented multinational enterprises, and both I and the President remain deeply committed to take the additional steps needed to implement this agreement, too. This historic agreement helps level the playing field for US business while protecting US workers.”
Yellen said that implementing this international tax deal will change the world’s corporate tax system to benefit American workers and middle-class families. “In the United States, rather than being rewarded for moving operations overseas, companies will be incentivized to keep jobs and headquarters at home,” she said.
“And rather than tax havens keeping the profits of US companies, those profits can instead flow back to the United States, allowing us to further invest in our infrastructure, our economy, and our people,” Yellen said.