German Finance Minister Olaf Scholz on Tuesday welcomed Washington’s backing for a global minimum corporate tax, calling it a “great step forward” in the battle to stem the erosion of government revenues.
“The support of the USA gives this initiative a strong tailwind,” Scholz told reporters, saying he hoped a deal could be reached this year.
The optimism comes a day after US Treasury Secretary Janet Yellen said Washington was pushing in the G20 for a global minimum corporate tax, saying the world’s interconnected economy had led to “a 30-year race to the bottom on corporate tax rates.”
“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,” she said in a speech to the Chicago Council on Global Affairs.
Finance ministers of the G20 club of large economies are expected to discuss the proposal during a virtual meeting on Wednesday, hosted by Italy.
A Treasury official told reporters the G20 goal is to have a proposal on the global minimum tax by July, and President Joe Biden’s administration could if needed change its legislation to bring the US minimum tax into line with the international plan.
A G20 agreement would give a push to ongoing negotiations in the broader Organisation for Economic Co-operation and Development (OECD) on a global minimum tax as a way to protect all members from erosion of tax revenues.
“I am confident that with this corporate taxation effort we can end the race to the bottom,” Scholz said, calling Yellen’s backing “a great step forward”.
“It’s now realistic that we could reach an agreement this year,” he added.