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A Global Deal Aimed at Ending Tax Havens Gains Momentum

todayOctober 7, 2021 2

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People with knowledge of the negotiations said that while the 15 percent rate was essentially a done deal, some of the world’s biggest countries continued to battle for exemptions to dampen its impact on longstanding economic models that have helped draw investment and create jobs.

“I’m fully determined to pave the way for a consensus because we are one millimeter away from a global agreement on a new international taxation system for the 21st century,” Bruno Le Maire, France’s finance minister, said on CNBC on Wednesday. “Of course there are some member states asking for a delay, asking for an implementation period, a transition period; we are totally open to that kind of proposals.”

Despite growing support for the agreement, concerns remain about how it will be enforced and if it will be enacted uniformly worldwide.

India, China, Estonia and Poland have said the minimum tax could harm their ability to attract investment with special lures like research and development credits and special economic zones that offer tax breaks to investors. China, for instance, has long used special economic zones with low tax rates to attract foreign investment, which has been a boon for its economic development.

The United States has been one of the deal’s most vocal supporters, but it also faces challenges ensuring that the Biden administration’s commitments are enacted by Congress. Mr. Biden’s economic agenda is in limbo, and Democrats are trying to figure out how to push through changes to the tax code that would ensure the United States is in compliance with the international agreement it is trying to broker.

The Treasury Department declined to comment on the details of the agreement, noting that the negotiations are still ongoing, but expressed optimism that a deal would be finalized when the leaders of the Group of 20 nations meet in Rome later this month.

Treasury Secretary Janet L. Yellen is “laser-focused on the progress being made to finalize what would be a historic deal, and expects countries to coalesce around the final parameters of a new international tax regime,” said Alexandra LaManna, a Treasury spokeswoman. She added that the deal would help create more jobs and investment in the United States and benefit workers.

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