U.S. Treasury says G7 expected to endorse U.S. global minimum tax proposal

WASHINGTON (Reuters) -Finance ministers from the G7 wealthy democracies are expected to endorse Washington’s proposal for an ambitious global corporate minimum tax when they meet in London later this week, a U.S. Treasury official said on Wednesday.

FILE PHOTO: A G7 logo is seen on an information sign near the Carbis Bay hotel resort, where an in-person G7 summit of global leaders is due to take place in June, St Ives, Cornwall, southwest Britain May 24, 2021. REUTERS/Toby Melville

The official said in an emailed statement the Treasury expects the G7 meetings on Friday and Saturday to provide momentum for advancing global corporate tax negotiations towards a broader G20 finance meeting in July in Italy.

The U.S. Treasury in May proposed a global minimum corporate minimum tax of at least 15% to try to end a downward spiral of corporate tax rates and deter multinational firms from shifting profits to tax-haven countries.

The proposed minimum is lower than the Biden administration’s own proposals to raise the domestic corporate tax rate to 28% and impose a 21% minimum levy on overseas profits earned by U.S. companies.

Deputy Treasury Secretary Wally Adeyemo told Reuters in late May that he expected strong support from G7 countries for the U.S. minimum tax proposal, adding this would help solidify support for Biden’s tax plans among U.S. lawmakers.

A number of other G7 officials have raised expectations for the finance ministers’ meetings in London, the first face-to-face meetings for the group since the COVID-19 pandemic turned them virtual last year.

German Finance Minster Olaf Scholz told Reuters in an interview that he expects the group to make “significant progress” on corporate tax issues, which include the thornier problem of agreeing on how to tax large global digital services companies such as Facebook, Amazon.com, Google Apple Inc and Microsoft..

A number of countries have imposed unilateral digital services taxes targeting these firms, which have drawn threats of retaliatory tariffs from the United States.

The United States has insisted that any tax regime for these firms not discriminate against U.S. companies and all individual digital services taxes be prohibited. It has instead proposed targeting the top 100 largest and most profitable firms for paying more taxes in the countries where they do business, regardless of their industry classification and business model.

British finance minister Rishi Sunak also told Reuters on Wednesday that the U.S. plan for targeting the top 100 firms could work, but insisted that the big technology firms must be part of this group and pay more tax where they operate.

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