Yellen to urge global minimum company tax to stop venue-hopping

Treasury secretary Janet Yellen signals that globalisation is back on the agenda

"Competitiveness is about more than how United States headquarters-headquartered companies fare against other companies in global merger and acquisition bids".

Marking an American return to the global stage, she said: "For in today's world, no country alone can suitably provide a strong and sustainable economy for its people". She singled out China, saying the USA needs a "strong presence in global markets" to level the playing field.

The US is involved in talks led by the Organization for Economic Cooperation and Development with about 140 countries to develop a global agreement on minimum levies, but participants haven't yet reached a deal.

Ms. Yellen said she is urging her Group of 20 nation colleagues to support the move as a way of ending a "race to the bottom" on corporate taxes as countries around the world steadily lowered rates over the past few decades in the hunt for a competitive edge.

Treasury Secretary Janet Yellen called for a global minimum corporate tax rate on Monday, a pitch that comes as the Biden administration begins to sell its roughly $2 trillion infrastructure and jobs proposal that would raise USA corporate taxes to fund the massive plan.

The US administration faces a challenge of discouraging US companies from moving jobs and production overseas, since in addition to the 28% corporate rate tax raise, Biden plans to enact a 15% minimum tax on the book income of the largest corporations. It's not yet clear if the almost 140 participants will be able to strike a deal by the self-imposed deadline this summer. "Together, we can use a global minimum tax to make sure that the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity", she said.

Earlier in the day, three Senate Democrats, Ron Wyden of Oregon Sherrod Brown of OH and Mark Warner of Virginia put forth an alternative plan that included higher levies on offshore profits and stronger penalties for companies that move income outside the country to avoid paying taxes to the Internal Revenue Service. Yellen's wish is what OECD has tagged as its Pillar 2.

It is understood the UK Government recognises that the proposal is likely to form part of a global tax overhaul that will also target tech giants, after US Treasury Secretary Janet Yellen pressed the case earlier this week.

"A global agreement on worldwide taxation is now within reach".

"We remain committed to ensuring that all businesses, including digital ones, pay their fair share of tax, where it is rightfully due", European Commission spokesman Dan Ferrie told a news briefing when asked about the USA proposal.

Ms Yellen is also keen for greater global co-operation, rolling back Donald Trump's protectionist policies. "A lack of global leadership and engagement makes our institutions and economy vulnerable".

"Speaking from my own experience, we need to do better at reducing barriers for women's economic empowerment, even unconscious ones, in almost every country in the world, including the United States", she said.

G20 finance ministers and central bank governors will gather virtually on Wednesday.

There are also several big economies with the rate lower than Biden's proposed 28%, including Italy, with its 24% corporate income tax (excluding 3.9% regional production tax), Spain, with its general 25% corporate income tax rate, and Russian Federation with its 20% maximum rate.

Yellen's speech demonstrates a major about-face.

Four years ago, Trump's newly sworn-in Treasury secretary, Mnuchin, shocked American allies during the administration's first global meeting with an approach so unilateral that it extended to outright disengagement.

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