Yellen insists Eire take part in world tax transactions

Brussels — The United States hopes Ireland will weaken its resistance to accession Global tax treaty As Treasury Secretary, it’s an intermediary Janet L. Yellen This week, she insisted on her Irish counterpart that it was an economic benefit to participate in the deal.

During his week-long trip to Europe, Yellen worked to put an end to tax havens and gain support for a global plan aimed at curbing profit shifts with a new global minimum tax. The agreement, which was endorsed by a group of 20 countries on Saturday, World minimum tax of at least 15%.. The method of allocating tax rights will also change, allowing countries to collect taxes from large, profitable multinationals based on where they sell their goods and services.

“For Ireland, low taxes were an incredibly successful economic strategy,” Yellen said in an interview Tuesday before returning to Washington. “They think it’s very important to their financial success, and I think we’ll go along with it, perhaps they need to be able to claim that it’s in the interests of the country. There is. “

This week, Jellen held a high stakes conference in Brussels with Paschal Donohoe, Ireland’s Finance Minister and Chairman of the Eurogroup, a club of European Finance Ministers. She needs Mr. Donoho’s help as the European Union requires unanimous consent between Member States to formally participate in the transaction. This will require changes to domestic tax law.

After meeting with Yellen on Monday, Donoho made a positive tone and said he would continue to engage in this process.

Despite growing global support for trading, much work remains.

More than 130 countries support the framework of the global consensus, which will be the largest international tax reform in decades, but with significant support from Ireland, Hungary and Estonia. Yellen stopped in Venice and Brussels on his first visit to Europe as Treasury Secretary and worked with his counterparts to dispel concerns and reach an agreement so that a final agreement could be signed by October. We have developed a strategy for participation.

Jellen told the Irish counterpart that the Irish economic model raises the tax rate from 12.5%, but there is still a big gap between that rate and the 21% tax rate on foreign income. Biden administration proposed..

The Byden administration will end the “race to the bottom” corporate tax and herald a new era of corporate governance that will help countries fund new infrastructure investments and reduce inequality. believe. Improving tax fairness could also help boost the rise of right-wing populists in power around the world in a wave of frustration that working-class citizens are being forgotten by the elite.

“Globalization doesn’t just help enrich the rich and hurt the poor,” Yellen said. “In a broader sense, international taxation is about it.”

The best economic authorities are considering the complex details of the global tax system and will scramble to complete them in the coming months. One of the thornies that came up at the G20 meeting in Venice last weekend was how tax revenues would be distributed around the world as part of a new tax on the largest and most profitable businesses. It was that.

Daily business briefing

Has been updated

July 22, 2021, Eastern Standard Time 6:17 pm

Selling contracts in the United States can be the biggest challenge. Parliament is narrowly divided, Republicans are determined not to support tax increases, and the Biden administration has little chance of success, even if it can pass most of the proposed tax reforms with just a vote from the Democratic Party.

Republican lawmakers have complained that the United States has “wasted” its tax base by allowing other countries to impose new taxes on the company. For example, in some cases, China could collect new tax revenues from American companies that sell products there. However, the United States will probably be able to collect taxes from some Chinese companies operating in the United States. It is not clear whether China will make a net profit from that part of the deal.

Yellen described the world tax as part of a broader economic view that the Biden administration believes is needed to prepare the United States and other countries of the world for future financial needs.

She points to the Biden administration’s tax plans as central to its approach, including raising the corporate tax rate from 21% to 28%, and the government wants to address what she considers to be unfair in US tax law. Stated. ..

“It’s not right that very successful companies can avoid paying a fair share to support their investment in the economy, their workforce, and their R & D. And they are operational. “Social safety net,” said Yeren.

Still, there is growing resistance from US companies, as corporate groups warn that a $ 2 trillion increase in corporate tax could make US companies less competitive around the world. Corporate interests also say that tax increases could boost inflation as US policymakers continue to worry about rising prices and companies will take over to consumers.

Jellen dismissed the theory, arguing that most economic studies are based primarily on past investments and do not harm workers or accelerate price increases. did.

“There is no reason to think that changes in corporate tax will have a direct impact on prices,” Yellen said.

Yellen insists Ireland participate in global tax transactions

Source link Yellen insists Ireland participate in global tax transactions

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