Us Treasury officials have proposed setting a minimum 15 percent tax rate on the global profits of multinational companies at meetings of the Group of 20 and the Organization for Economic Cooperation and Development in an effort to boost negotiations on reforming the international tax system, the Treasury Department said on May 20。Observers see the move as another form of "America First", intended to match the Biden administration's tax increases to fund huge infrastructure projects, maintain the global competitiveness of US companies and repair once-strained relations with Europe。
Repatriating foreign earnings to shore up finances
Public opinion generally believes that behind the agitation to set the lowest corporate tax rate in the world is the idea of making the world pay for the interests of the United States, preventing American companies from transferring their business overseas, and making up for the "loss" that the Biden administration may bring to the United States by trying to raise the corporate tax rate of the United States.。
On April 7, the US Treasury announced the "Made in America Tax Plan", which will increase the US corporate tax rate from 21% to 28%, and reduce the minimum tax rate on corporate overseas profits from 10%.To 21 percent to curb offshore tax avoidance and incentivize companies to invest more in the United States。
The White House expects the tax increases to raise about $2 trillion in federal revenue over the next 15 years, offsetting the cost of the Biden administration's infrastructure plans。
In recent years, multinational Internet companies have been accused of exploiting loopholes in the current international tax system to achieve alarming levels of tax evasion while making huge profits around the world。According to a third-party study, the difference between taxes owed and actual taxes paid by six U.S. companies - Amazon, Google, Apple, Facebook, Microsoft and Netflix - was more than $150 billion over the past decade。
It is estimated that once the world's lowest corporate tax rate is set, about 100 of the world's largest and most profitable companies will be affected by the new tax rules。The US Treasury estimates that preventing US companies from shifting profits overseas would generate about $700bn in federal revenue。
Safeguarding the global competitiveness of US companies
Under the Biden administration's tax increase plan, setting a floor on global corporate tax rates would prevent companies that pay taxes in low-tax jurisdictions from gaining a competitive advantage over those that pay taxes to the U.S. government, effectively insuring U.S. business competitiveness。
The Wall Street Journal quoted Manal Cowen, head of the National Tax Office at KPMG in Washington, as saying that setting the lowest corporate tax rate in the world would reduce the pressure on American companies, given the high offshore tax rate in the United States。
Reuters pointed out that the move is hoped to reduce the erosion of the tax base, so that US companies avoid falling into a financial disadvantage, to help them continue to grow in innovation, infrastructure and other areas。
Singapore's Lianhe Zaobao commented that the United States wants to take this opportunity to maintain its "leadership role in the world economic order", which talks about multilateralism on the surface, but the reality is just another form of "America first".。
America and Europe are not in sync
For many years, setting the lowest global corporate tax rate has been an important goal of international tax reform advocated by OECD countries and others。Analysts believe that unlike the principle of protecting the interests of US technology giants under former US President Donald Trump, the Biden administration's push for a unified front on global taxation measures will help repair damaged US-European relations。
The push to set the world's lowest corporate tax rate marks a shift in international economic policy by the Biden administration, heralding an improvement in transatlantic relations。
However, observers believe that the US and Europe appear to agree on a global minimum corporate tax rate, but it is not。Tax rates vary widely across Europe and economic development levels are increasingly divergent, making it difficult to agree on a common standard。If a unified tax "union" is established, smaller member states will inevitably become a "stepping stone" for the larger countries to stabilize tax revenues.。Countries such as Estonia, Ireland and Sweden, for example, have small populations and few natural resources, so they can only attract foreign investment through low taxes and improve their global competitiveness。As a result, the pace among developed countries is difficult to coordinate。