The global minimum tax rate: will it happen?
09 June 2021
The global minimum tax rate: will it happen?
With the recent landmark G7 accord, the idea of a global minimum tax rate is having something of a renaissance; Ian Borman and James Mastracchio give the lowdown
Ian Borman (L) and James Mastracchio (R) Images courtesy of Winston & Strawn Members of the G7, which include Canada, France, Germany, Italy, Japan, the UK and the US, have reached an agreement that a global minimum tax should be implemented and the respective treasuries will support a broader global effort. While the reported rate would be 15% and the digital tax of the individual countries would cease, the details of how the minimum tax would be imposed, on which corporations and on what terms is unknown.
Read more about Explained: What is a global minimum tax and what will it mean? on Business Standard. Major economies are aiming to discourage multinationals from shifting profits - and tax revenues - to low-tax countries regardless of where their sales are made.
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Britain s Chancellor of the Exchequer Rishi Sunak speaks at a meeting of finance ministers from across the G7 nations ahead of the G7 leaders summit, at Lancaster House in London, Britain June 4, 2021. Stefan Rousseau/PA Wire/Pool via REUTERS
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Finance Ministers from the Group of Seven (G7) rich nations have said they are close to a landmark accord setting a global minimum corporate tax rate, an agreement that could then form the basis of a worldwide deal. read more
Such a deal aims to end what U.S. Treasury Secretary Janet Yellen has called a 30-year race to the bottom on corporate tax rates as countries compete to lure multinationals.
Highlights
The Biden Administration on May 28, 2021, released its fiscal year (FY) 2022 budget. The $6 trillion budget, the largest since World War II, focuses on rebuilding the nation s aged infrastructure, augmenting the social safety net and combatting income inequality. The theme is to grow the U.S. economy from the bottom up and middle out, and not from the top down.
To fund some of these expenditures, the Biden Administration proposes to increase taxes on the wealthy and corporations and to enhance Internal Revenue Service (IRS) compliance, information and enforcement initiatives, projected to raise $3.6 trillion in revenues over a decade.
This Holland & Knight alert provides an overview of the proposed corporate and individual income tax increases as detailed in the U.S. Department of the Treasury May 2021 General Explanations of the Administration s Fiscal Year 2022 Revenue Proposals (the so-called Green Book). Subsequent alerts will focus on discrete topics, such as the i