Home » Economy » Yellen cajoles European global minimum tax holdouts after G-20 meeting in Venice
Yellen cajoles European global minimum tax holdouts after G-20 meeting in Venice
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Treasury Secretary Janet Yellen on Monday called on European holdout countries that have not signed onto the global minimum tax deal to support the breakthrough agreement, though she has said it's not necessary for all nations to adopt it.
"We hope all EU member states will join the consensus and the European Union will move forward on this issue at EU level," Yellen said in a statement following the meeting of G-20 finance ministers and central bank governors in Venice, Italy. "This race to the bottom must end, and working together we can ensure that it does."
WHAT IS A GLOBAL MINIMUM TAX, AND HOW WOULD IT WORK?
In June, 131 of the 139 countries in the Organization for Economic Cooperation and Development agreed to a long-sought conceptual framework to overhaul the global tax system, including a minimum rate of at least 15% on multinational corporations, regardless of where they operate.
But nine countries – Barbados, Estonia, Hungary, Ireland, Kenya, Nigeria, Sri Lanka, St. Vincent and the Grenadines and Peru – did not sign the tentative framework.
The group of three European Union countries – Estonia, Hungary and Ireland – resisting the revamp of the corporate tax is perhaps most significant, because a unanimous decision may be required among the 27-member bloc in order for it to adopt the initiative.
Yellen told reporters on Saturday that she believed some of those countries' concerns could be addressed before the G-20 leaders' summit in October, when the OECD nations hope to finalize the tax agreement.
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"We'll be trying to do that, but I should emphasize it's not essential that every country be on board," she said, according to Reuters. "This agreement contains a kind of enforcement mechanism that can be used to make sure that countries that are holdouts are not able to undermine – to use tax havens that undermine the operation of this global agreement."
Ireland, which has a 12.5% corporate tax rate, said it has "reservations" about the proposal, but suggested it is open to continuing negotiations and reaching an agreement that it can support.
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